California Supreme Court Refuses to Hear Case Involving Narrow Definition of Exempt Commissioned Employee and Expansive View of the Unfair Competition Law

On June 28, 2006, the California Supreme Court denied review of Harris v. Investor’s Business Daily, Inc., 138 Cal. App. 4th 28 (2006), leaving in place a problematic decision for employers with California employees. Harris was a telemarketer selling newspaper subscriptions. She claimed she was not overtime exempt and filed a class action lawsuit. In it, she sought to certify two classes: (1) on behalf of employees who were misclassified as exempt and denied overtime, and (2) on behalf of employees who were subject to an unlawful commission deduction. The trial court certified a class on the unlawful commission deduction claim, but did not certify the class on the overtime claim. Harris then amended the complaint, adding an unfair competition claim under California law for unpaid overtime under the federal Fair Labor Standards Act (FLSA). The trial court dismissed the new claim and granted summary judgment as to the remaining claims. The court of appeal overturned the trial court and issued a number of troubling rulings.