It is difficult to defend a class action based on exemption, which explains why many of these cases (as herein) settle. This is because the employer-defendant is (usually) going to be completely right, or totally wrong. Either the class of workers (especially if the exemption at issue is professional or administrative) will meet the regulatory tests or they will fall short. That is the reason these cases often settle, because the employer does not want to test its theory at an expensive trial.
Case in point. A judge in California just gave final approval to a 1.5 million settlement to resolve class action allegations that a group of senior artists for a video game giant company were wrongly classified. The case is entitled Lee et al. v. Activision Blizzard Inc. et al., and was filed in Superior Court of the State of California, County of Los Angeles.
The Judge approved a settlement in this case, more than two years after the named plaintiff, John Lee, filed a suit alleging that the Company had misclassified the senior artists as exempt, salaried employees to avoid paying overtime. The Court approved the sum of $1.5 million for the class of 128 artists, as well as legal fees of $500,000.
The lawyer for the plaintiffs claimed they had a strong case on the classification issue. The Company maintained that the senior artists were properly classified and it had a basis for potentially wiping out all damages in the case. The Company had garnered several Affidavits from the class members themselves who asserted that they were properly classified. The Company asserted in the motion that “given that the makeup of the 128 member putative class consisted of approximately 80 percent individuals, who continue to be employed by the defendant, it was possible that at trial, any if not all of the currently employed class members might testify that they were properly classified during the class period or that they worked no overtime hours at all.”
The exemptions at issue were the professional and possibly the administrative. The Company might have been well advised to settle, however, because the professional exemption virtually mandates a long, prolonged course of study in a field recognized as “professional.” The administrative exemption, as I have preached many times, is the most difficult of the white collar exemptions to defend, especially on the issue of discretion vs skills and experience, which may well have been the stumbling block in this case for the Employer.