765 F. Supp. 2d 1185
N.D. Cal.2011Background
- In 2003 Hershey restructured its domestic sales force, creating an entry-level Retail Sales Representative (RSR) position and classifying it as exempt from overtime under federal and California law.
- RSRs service retail outlets in designated territories, with about 500 nationwide and roughly 37 in California; upper-level sales staff handle corporate-level orders/shipping.
- Disputes over RSR duties: Hershey says RSRs directly sell, consult with retailers, and occasionally merchandise; plaintiffs claim RSRs mainly merchandise and do not make primary sales.
- Three former RSRs filed suit in 2008 alleging misclassification; the case later proceeded as a collective action under federal and California claims, adding many opt-ins and deceased named plaintiffs.
- The court has reviewed a voluminous record including declarations from dozens of plaintiffs and multiple depositions to determine if exemptions apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the outside sales exemption apply to RSRs as their primary duty? | RSRs primarily merchandise, not make sales themselves. | RSRs engage in incremental selling and sell-through that constitutes making sales. | Outside sales exemption does not apply; primary duty is not making sales. |
| Does the administrative exemption apply to RSRs as their primary duty? | RSRs perform nonmanual work and exercise discretion on matters of significance. | RSRs lack duties of significance and operate under supervisor-guided merchandising. | Administrative exemption does not apply; duties do not meet matters of significance. |
| Can the combination exemption apply by aggregating exempt duties? | Even if neither exemption alone fits, a combination could apply. | Cannot cobble nonexempt duties to create an exemption. | Combination exemption does not apply; no primary exempt duties shown. |
Key Cases Cited
- Jewel Tea Co. v. Williams, 118 F.2d 202 (10th Cir. 1941) (outside sales exemption factors; commissions and autonomy discussed)
- Christopher v. SmithKline Beecham Corp., 635 F.3d 383 (9th Cir. 2011) (multi-factor approach; deference to DOL interpretations; industry distinctions)
- Dalheim v. KDFWTV, 918 F.2d 1220 (5th Cir. 1990) (caution against packing nonexempt duties to create exemption)