California Appellate Court Significantly Limits Administrative Exemption

On August 16, 2007, the California Court of Appeal issued its decision in Harris v. Superior Court, which significantly limits the scope of the administrative exemption under California law. This class action involves four consolidated actions against insurance companies. The employees, all claims adjusters, alleged that the insurance companies improperly classified them as exempt from the overtime compensation requirements of California law. The defendants insurance companies, contended the adjusters were properly classified as exempt pursuant to the administrative exemption contained in the California Industrial Welfare Commission’s Wage Order 4 (Cal. Code of Regs., tit. 8, § 11040).