In Campbell v. PricewaterhouseCoopers, LLP, the Ninth Circuit Court of Appeals held that unlicensed accountants in California were not ineligible, as a matter of law, from being exempt from overtime under either the professional or administrative exemptions.

Two former unlicensed accountants in a subdivision of PricewaterhouseCoopers (PwC) filed a class action lawsuit alleging that PwC violated California wage and hour laws by improperly classifying them as exempt from overtime. Plaintiffs claimed they performed predominately routine and menial work and that strict instructions, computer software, and a work review-system precluded them from exercising any significant degree of discretionary judgment or analytical thinking. PwC argued that plaintiffs performed work integral to PwC’s services and to the extent that they did not exercise discretion and independent judgment, they were failing to meet the firm’s expectations. Both parties filed motions for partial summary judgment on whether plaintiffs were exempt under the professional, executive, and administrative exemptions. The district court granted plaintiffs’ motion for partial summary judgment, finding that as a matter of law, PwC could not classify plaintiffs as exempt from overtime under the applicable IWC Wage Order on the grounds that: (1) unlicensed accountants categorically are ineligible for the professional exemption; and (2) PwC had not established an issue of triable fact on whether plaintiffs’ work was performed “under only general supervision,” an essential element of the administrative exemption.

The Ninth Circuit Court of Appeals reversed. The court first concluded that the district court’s finding that plaintiffs could not fall under the professional exemption because they were unlicensed was “contrary to the exemption’s text and structure and would produce highly problematic precedent affecting several non-accounting professions.” The court examined the text of the two subsections of the Wage Order’s professional exemption. Subsection (a) allows the professional exemption to apply to an employee “[w]ho is licensed or certified by the State of California and is primarily engaged in the practice of one of the following recognized professions: . . .accounting. . .” Subsection (b) allows the professional exemption to apply to an employee “[w]ho is primarily engaged in an occupation commonly recognized as a learned or artistic profession.” The court found that simply because an accountant is unlicensed, and therefore not exempt under subdivision (a), does not mean that the accountant can not be exempt under subsection (b) if the accountant otherwise meets the test of that subsection. The two subdivisions are not mutually exclusive. The court found that to hold otherwise would mean that employees such as medical residents who were not yet licensed or first-year associates at a law firm waiting for bar exam results also could not qualify for the exemption. This was not the IWC’s intended result. The court then found there were disputes of material fact as to whether plaintiffs met the test of subsection (b) of the exemption.

The court also concluded that PwC proffered enough evidence to raise a triable issue of fact as to whether the administrative exemption applied. The court disagreed with the district court’s finding that all unlicensed accountants necessarily were subject to more than “general supervision,” and therefore could not be administratively exempt. The court stated that the authorities relied upon by plaintiffs did not distinguish general supervision from any other kind of supervision, and were not persuasive. There were numerous factual disputes in the record as to the nature and scope of PwC’s supervision of plaintiffs that only could be resolved by trial.

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