Conley v. Pacific Gas & Elec., 131 Cal. App. 4th 260 (2005)

Two senior new business representatives and two engineers of PG&E filed this class-action lawsuit, alleging that they and others had been improperly classified as exempt employees under federal and state overtime law. Plaintiffs challenged PG&E’s policy of making deductions from exempt employees’ vacation-leave accruals for partial-day absences on the ground that such deductions constituted a reduction in the amount of compensation they received based on the quantity of work they performed. The trial court denied plaintiffs’ class certification motion in its entirety, and the Court of Appeal affirmed. The appellate court held that plaintiffs did not have a viable legal theory to support the claims of their proposed “salary basis” class: “In sum, we find nothing in California law that precludes employers from following the federal rule that permits them to require the use of vacation leave for partial-day absences without causing otherwise exempt employees to become non-exempt under the salary basis test.” Cf. Cleveland v. City of Los Angeles, 420 F.3d 891 (9th Cir. 2005) (FLSA exemption relating to fireprotection activities does not apply to dual-function paramedics); Huntington Memorial Hosp. v. Superior Court, 131 Cal. App. 4th 893 (2005) (hospital nurses who received short-shift differential for certain hours may be entitled to overtime pay).