Morales v. 22nd Dist. Agricultural Ass’n, 1 Cal. App. 5th 504 (2016)

Jose Luis Morales and 177 other similarly situated plaintiffs sued their employer under Cal. Labor Code § 510 and the federal Fair Labor Standards Act (“FLSA”) for failure to pay them overtime. Plaintiffs’ employer is a California agency that owns and manages the Del Mar Fairgrounds and the Del Mar Horsepark. Plaintiffs are seasonal employees who assist with amusement and seasonal operations and are referred to internally as “119-day employees” because they are limited to working for that period of time during a calendar year. The trial court sustained the employer’s demurrer to the state law claims and conditionally certified the case as a collective action under the FLSA. The jury rendered a special verdict in favor of the employer and the court entered judgment, determining the employees are exempt under the amusement exemption that applies to any employee of an establishment whose business is to provide amusement or recreation (29 U.S.C. § 213(a)(3)). The Court of Appeal affirmed the judgment in favor of the employer on the FLSA claim after concluding that the eligibility for the amusement exemption turns on the nature of the employer’s revenue-producing activities and not on the nature of the work performed by the employees. The Court further held that while the trial court had properly sustained the employer’s demurrer to the Section 510 claim, it should have given plaintiffs leave to amend to allege that they were eligible for overtime when the employer loaned them to outside promoters to support “interim events” such as gun shows, bridal bazaars, private parties, weddings, hot tub sales, etc.