Harris v. Investor’s Business Daily, 138 Cal. App. 4th 28, 2006 WL 786806 (Mar. 29, 2006)

Plaintiffs were employed as telemarketers selling subscriptions to a financial newspaper, Investor’s Business Daily. The telemarketers’ compensation was based on a point system, which rewarded them for selling longer subscriptions, winning daily contests and meeting weekly sales goals. In addition, they were subject to a “chargeback” if the subscriber cancelled the subscription within 16 weeks. The employees were paid the greater of commissions earned or the prevailing minimum wage for hours worked. In their lawsuit, plaintiffs challenged the chargebacks and asserted overtime violations. The Court of Appeal reversed the dismissal of plaintiffs’ claim for violation of California Business & Professions Code § 17200 (predicated upon a violation of the federal Fair Labor Standards Act), holding that the state law claim was not preempted by the federal statute. Similarly, the Court reversed the dismissal of plaintiffs’ overtime claim, finding material issues of fact as to whether they were subject to the commission exemption, and the chargeback claim on the ground the deductions may have been unlawful pursuant to California Labor Code § 221. Cf. Jones v. Gregory, 137 Cal. App. 4th 798 (2006) (company’s CEO was not personally liable for unpaid wages and vacation benefits).