In the waning days of 2011, a unanimous California Supreme Court gave California employers a holiday present in its long-awaited opinion that diminishes the importance of the outmoded analytical tool known as “the administrative/production worker dichotomy” for determining whether employees are properly classified as exempt “administrative” employees for the purposes of wage and hour law. In its decision in Harris v. Superior Court (Liberty Mutual), the court re-establishes the necessity of analyzing all aspects of the administrative exemption and emphasizes the relevance of federal law in interpreting the exemption. As a result, the decision could help California employers relying upon the administrative exemption.

At issue in Harris v. Superior Court was the exempt status of a certified class of Liberty Mutual insurance claims adjusters, who the lower appellate court found were not exempt as a matter of law under the administrative exemption. If employees fall within the “administrative exemption” under California law, they are exempt from California laws requiring payment of overtime, minimum wage, and from meal/rest break obligations....