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Employer's Uniform Classification of Its Own Employees Does Not Justify Class Treatment -- Wells Fargo Home Mortgage Overtime Pay Litigation

In re Wells Fargo Home Mortgage Overtime Litigation clarifies the role played by an employer's use of uniform job classifications when deciding to certify an overtime class.       

The opinion arose from Wells Fargo's appeal of the District Court order certifying a class of Wells Fargo "home mortgage consultants" for the purpose of determining whether they had been internally misclassified as exempt from overtime. 

As usual, the Company had an internal policy of designating everyone within this job title as being exempt from overtime regardless of any individual variation in his or her job duties.  Once sued, however, the Company took the arguably inconsistent position that it was impossible to determine overtime eligibility on such a group-wide basis.

The Ninth Circuit first made clear that an employer's internal decision to treat all members of a given job title as exempt from overtime is clearly relevant to class treatment.

The first line of attack, that Wells Fargo's exemption policy was an impermissible factor, is a non-starter. An internal policy that treats all employees alike for exemption purposes suggests that the employer believes some degree of homogeneity exists among the employees. This undercuts later arguments that the employees are too diverse for uniform treatment. Therefore, an exemption policy is a permissible factor for consideration under Rule 23(b)(3).

The District Court had gone much further, however, by employing the logic that 'it is manifestly disingenuous for a company to treat a class of employees as a homogeneous group for the purposes of internal policies and compensation, and then assert that the same group is too diverse for class treatment in overtime litigation.'

The Ninth Circuit felt that this went too far and placed too much weight on Wells Fargo's internal overtime classification policy.  In the view of the Appellate Court, this internal policy was relevant, but should have warranted only slight weight in determining whether individual or common issues could be said to "predominate."

Wells Fargo's uniform exemption policy says little about the main concern in the predominance inquiry: the balance between individual and common issues. As such, we hold that the district court abused its discretion in relying on that policy to the near exclusion of other factors relevant to the predominance inquiry

Significantly, the Ninth Circuit made no ruling as to whether a class should be certified in the case.  It merely remanded with directions to re-consider the matter with more weight on the job duties of the position and less weight on the internal "uniform exemption policy."    

   

Full post as published by California Labor & Employment Defense Blog on July 13, 2009 (boomark / email).