Paul v. One Touch Technologies

Filed 6/21/07 Paul v. One Touch Technologies CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from a judgment of the Superior Court of Orange County, Frederick P. Horn, Judge. Affirmed.

Clayson, Mann, Yaeger & Hansen and Barry M. Walker for Plaintiff and Appellant.

Hill, Farrer & Burrill, Ronald W. Novotny and Todd E. Hyatt for Defendant and Respondent.

* * *

Robert Paul appeals from the judgment of the superior court in favor of his former employer, One Touch Technologies (One Touch), denying Paul relief on his complaint to recover overtime compensation because he was exempt under the administrative exemption. Paul contends the judgment is not supported by substantial evidence. We affirm.

FACTS

Paul worked for One Touch from December 2000 through February 2004, when he was terminated. One Touch told him he would have to sign a general release before receiving his final paycheck, so he filed a complaint with the Labor Commissioner. After receiving his paycheck, Paul amended his complaint to include a claim for overtime compensation in the amount of $18,608.25. In November 2005, an administrative hearing was held, and Paul was awarded back wages for overtime plus interest and penalties in the amount of $29,020.08. One Touch appealed to the superior court for a trial de novo. (Lab. Code,  98.2, subd. (a).)

The case was tried before the court over three days. The evidence established that One Touch is a designer, creator and installer and service company for electronic medical records. Its system, which was used in skilled nursing facilities, captured all clinical information about a patient, including vitals, observations, diagnosis, physicians orders, therapy treatments, all the things that were done with or documented or required for a patient were part of that record. As the system evolved, it also included an electronic medication administration record. When Paul started working at One Touch, the system was in its raw infancy; by the time he left, a little over three years later, the system was very complete and market ready and being accepted into the medical community. It was installed in 13 locations at that time.

Paul was hired as a field support rep., responsible for maintaining client good will and support during and after the installation and implementation of the companys software system . . . . Later, his title was changed to technical specialist, but the duties were the same. His first two years with One Touch were spent at the beta sites, which were where the initial version of the software was put into an environment for which it was designed and then tested for functionality and performance. During Pauls time at the beta sites, the software product evolved from a early stage product through many upgrades to a complete product. Paul contributed to the upgrades by communicating to the engineers what is the system currently doing as it relates to what the engineers thought it was going to do. And whether it was performing the functions that the nurses wanted it to perform because thats really where the engineers and the sales side determines what new functionality would be added to the system. [] So the beta site was not just the testing environment for whether our system worked or not, it was on the receptivity of the nurses and other clinical caregivers as to how they liked the way it was set up.

Paul was described as the highest ranking technical person on site of any customer as well as on site of both beta installations. Craig Griffin, the vice-president of implementation and training, to whom Paul directly reported during the latter part of his employment, explained that he did not have a technical background, so he relied on Pauls technical opinion as it relate[d] to the customers environment or what the customer needed, and his findings on the flow of data throughout the network or our system. Paul worked in the capacity of a troubleshooter, and in doing so he used discretion and independent judgment in evaluating problems and solving them. For initial installations, Paul would evaluate the customers network environment, server environment, the . . . power source for what was required to run our systems. He would consult with the customer and advise what was necessary to integrate the computer networks into the One Touch system. Griffin explained Pauls independent judgment was necessary because [e]very facility that we have is different and unique. No one description would fit them all. And it requires somebody with a detailed network and technical background in order to understand their environment and how it would relate to the One Touch system The proper functioning of the One Touch system was vital to the customers operations because as soon as they gave [up] paper, they had nothing to rely on except for the electronic record. So very important that it worked at all times. It was mission critical information, and if it wasnt working right, we were in big trouble.

Paul was hired at an annual salary of $50,000; during the course of his employment, the salary was raised to $64,000. Shortly after he was hired, Paul asked about overtime pay, and was told he was exempt. Robert Davis, the president of One Touch, and Griffin both testified Paul had no set hours and would come into the office anytime during the day. Davis explained, Were a technology company related to healthcare, which is a 24/7 business. So our hours are largely dictated by customer issues that we have to take care of. Like the other technical specialists, Paul worked at home some of the time and was at customer sites much of the time. [A]ll of the technical specialists [are] pretty much on their own to perform their required functions and report back to the customer . . . or ask for help if they need help. Griffin testified Paul was not closely supervised. There was no specific tracking of his time as it relates to how long he spent on specific issues, troubleshooting, investigating. On at least several occasions, Griffin called Paul at home during a weekday afternoon, and Paul would admit to working on his truck. He also admitted to working and overhauling a boat, and then on occasions, he would admit to taking a swim in the pool in the middle of the day.

The trial court found Pauls position to be exempt from overtime under the administrative exemption; it also found [t]here was a lack of clear credible evidence establishing Mr. Pauls work hours resulting in an inability to establish how many hours of which days in each week he worked. Paul requested a statement of decision; One Touch submitted a proposed statement of decision which, after objections and argument, the court adopted and signed. Judgment was entered for One Touch.

DISCUSSION

Paul contends the trial court erred in ruling he was exempt from overtime under the administrative exemption. Whether an employee is exempt is a factual question, which we review under the substantial evidence rule. (Nordquist v. McGraw-Hill Broadcasting (1995) 32 Cal.App.4th 555, 561.) [W]hen the trial courts findings are set forth in a statement of decision, any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision. [Citations.] (TME Enterprises, Inc. v. Norwest Corp. (2004) 124 Cal.App.4th 1021, 1030.)

Employees who work more than (8) eight hours in any workday or more than 40 hours in any workweek shall receive one and one-half (1 1/2) times such employees regular rate of pay for all hours worked over 40 hours in the workweek, unless they are employed in administrative, executive, or professional capacities. (8 CCR  11040 (1)(A) & (3)(A)(1).) The administrative exemption applies to an employee (a) [w]hose duties and responsibilities involve . . . [] (I) The performance of office or non-manual work directly related to management policies or general business operations of his/her employer or his employers customers; . . . and [] (b) Who customarily and regularly exercises discretion and independent judgment; and [] . . . [] (d) Who performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge; . . . and [] (f) Who is primarily engaged in duties that meet the test of the exemption. . . .  [] (g) Such employee must also earn a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment. . . . (8 CCR  11040 (1)(A)(2).)

Directly Related to Management or General Business Operations

Paul first contends the evidence does not support the trial courts finding that he performed work directly related to the general business operations of One Touch or its customers. The federal regulation interpreting the phrase directly related to management or general business operations explains that an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment. (29 C.F.R.  541.201(a).)^[1] Examples include work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; legal and regulatory compliance; and similar activities. (29 C.F.R.  541.201(b), italics added.) An employee may be exempt if he or she performs exempt work for the employers customers. Thus, for example, employees acting as advisers or consultants to their employers clients or customers (as tax experts or financial consultants, for example) may be exempt. (29 C.F.R.  541.201(c).)

The trial court found that Paul acted as a consultant and advisory specialist to [One Touchs] clients, in which capacity he assisted in the development and configuration of software for [One Touchs] clients and continually advised on how to functionally integrate it into their computer systems. . . . [Pauls] responsibilities [included] configuring the settings for the customers Information Technology (IT) environments, each of which was unique . . . . Paul agrees these factual findings are accurate, but argues they describe a mere troubleshooter. Citing Bothell v. Phase Metrics, Inc. (9th Cir. 2002) 299 F.3d 1120, he contends the exemption is meant to apply to one who is involved in running the business itself or determining its overall course or policies. (Id. at p. 1125.)

In Bothell, the employer was a designer, manufacturer and seller of robotic test and inspection equipment for the data storage industry. The employee seeking overtime was a field service engineer for one of the employers largest clients. The employee spent the majority of his time at the [clients] facility, coming to the [employers] office two or three times a week to do paperwork, meet with his supervisors, review new products, and/or pick up supplies. The employee was the employers main contact with [the client]. (Bothell v. Phase Metrics, Inc., supra,299 F.3d at pp. 1122-1123.) The district court granted summary judgment in favor of the employer, finding the employee was exempt from overtime under the administrative exception. The appellate court reversed, finding the employees testimony raised a question of material fact.

The employee testified his primary duties were to keep [clients] equipment in good working order and to act as a conduit for information between his employer and its customer. [He] testified that, over a fifty-two week period, he worked with crews to install ten machines, each of which took approximately two weeks: installations, including the paperwork and customer contacts directly associated with those installations, took up approximately 40% of his time. In addition, [he] spent additional time troubleshooting and maintaining the existing machines. The remainder of his time was spent responding to customer calls, learning about systems and procedures, and completing the paperwork required by [employer]. . . .  [He] was never given final decision-making authority for any specific dollar limit, and all parts were stored at the home office and could be obtained only through the supervisor. (Bothell v. Phase Metrics, Inc., supra, 299 F.3d at p. 1124.)

The employer submitted evidence that the employee managed the clients account, including staffing, supervision, and billing; implemented and developed warranty policy; and acted as advisor to the clients production department. The employees evidence, on the other hand, portrayed himself as the high-tech equivalent of the Xerox machine man who meets and confers with customers to identify the problem, diagnoses the malfunction, formulates a work plan, repairs the equipment based on procedures established by the manufacturer, and fills out a field service report to enable his employer to bill for the work. (Bothell v. Phase Metric, supra, 299 F.3d at p. 1128.) The court found the conflict in the evidence raised a material issue of fact, which precluded summary judgment.

The language quoted by Paul was used by the Bothell court as an example of activity that meets the administrative exemption, not as a definition. The key issue is whether [the employees] primary duty while employed at [employer] involved the performance of non-manual work directly related to management policies or general business operations of [employer] or [client]. [Citation, emphasis added.] This requirement is met if the employee engages in running the business itself or determining its overall course or policies, not just in the day-to-day carrying out of the business affairs. [Citation.] (Bothell v. Phase Metrics, Inc., supra,299 F.3d at p. 1125.) Furthermore, because of its procedural posture, Bothell is not helpful to Pauls position. There, the court viewed the evidence in the light most favorable to the employee, who was opposing the summary judgment, and found a triable issue of fact. Here, the question of fact was resolved by the trial court, and the testimony of Davis and Griffin provides ample evidence to support it.

Paul points to an opinion letter from the U.S. Department of Labor (U.S. Dept. of Labor, Wage & Hour Div. (August 1999) 1999 WL 1788144) regarding an employer who installed computer systems and customer training on the installed software. The employees claiming overtime were customer training consultants who provide training to employees on customers specialized computer software; manipulate and modify software settings and specifications (e.g. toolbars and setup) to fit and respond to customer needs (does not include program writing or software developing); install, debug, troubleshoot, and convert data from old systems to the new conversions; test customers modems; and conduct customer follow-up visits to ensure customer satisfaction. The DOL found the employees did not qualify under the administrative exemption because [t]hese individuals perform technical tasks, which do not constitute making or implementing policy, or the performance of management functions, necessary for the application of the exemption. Paul claims he performed many of the same activities as the employees in the opinion letter, thus he should be found non-exempt.

The difference between the opinion letter employees and Paul is that he was engaged in testing and configuring the software and modifying it so it could function in each unique client environment. This was more than manipulating predetermined settings and specifications.

Paul again compares himself to the employee claiming overtime in Martin v. Indiana Michigan Power Company (6th Cir. 2004) 381 F.3d 574. There, the employee was an information technology support specialist for a power company. The employee responded to help desk tickets, which were problems reported by other employees experiencing problems with their computers. He would go to the indicated location and attempt to repair the problem. Martin installs software, such as Microsofts Office 97, on individual workstations. He troubleshoots Windows 95 problems and installs provided software patches. (Id. at p. 577.) If he could not repair the problem, he would report to his supervisor, who would decide what to do. The court found him non-exempt under the administrative exemption: Martins job . . . is to assist in keeping the computers and network running to the specifications of others. (Id. at p. 582.)

In contrast, Paul was involved in the design and configuration of the software itself. While Martin solved problems by following Microsoft remedies and installing software patches designed by someone else, Paul was responsible for creating the remedies for an evolving software program.

Exercise of Discretion and Independent Judgment

Paul next contends the evidence does not support the trial courts conclusion that he exercised discretion and independent judgment with respect to matters of significance. He claims his discretion was limited to identifying a computer problem and deciding whether he could fix it or needed help from other employees; his discretion was further limited by the protocols created by the engineering department of One Touch.

According to the federal regulations, exercising discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. (29 C.F.R.  541.202(a).) Factors to be considered include whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; . . . carries out major assignments in conducting the operations of the business; . . . performs work that affects business operations to a substantial degree, even if . . . related to operation of a particular segment of the business; . . . has authority to commit the employer in matters that have significant financial impact; . . . has authority to waive or deviate from established policies and procedures without prior approval; . . . has authority to negotiate and bind the company on significant matters; . . . provides consultation or expert advice to management; . . . is involved in planning long- or short-term business objectives; . . . investigates and resolves matters of significance on behalf of management; and . . . represents the company in handling complaints, arbitrating disputes or resolving grievances. (29 C.F.R.  541.202(b).)

To support his position, Paul cites another Department of Labor Opinion Letter which opined that a senior network administrator/project manager was not exempt from overtime. The employees duties included assist[ing] the User Support Manager with projects; assum[ing] responsibility for network activities, and oversee[ing] other Information Technology Department (ITD) personnel; perform[ing] computer hardware, software, Novell 4.11 and other operating system installations, tuning, troubleshooting and system integration of related components; maintain[ing] assigned priorities and prepar[ing[ status reports; schedul[ing] work pertaining to network problems and software upgrades; assist[ing] the User Support Manager with training and mentoring of staff; and research[ing] and assist[ing] the User Support Manager with network problem solving. (U.S. Dept. of Labor, Wage & Hour Div. (Nov. 1999) 1999 WL 33210907.)

In contrast, Pauls duties with respect to a client were to use his discretion and judgment in evaluating its network environment, deciding which user accounts and domain rights it needed to interact with the One Touch system, and consulting with the highest levels of management to determine what the customer needed to make the system functional. Furthermore, he used discretion and independent judgment when resolving the customers problems. Although he sometimes needed to consult with the engineering department and was assisted by documents prepared by them, he was not merely following a series of predetermined responses. The One Touch software was newly developed, and each customer environment presented an opportunity for Paul to brainstorm and solve problems without a documented precedent.

The federal regulations explain that the term discretion and independent judgment does not require that the decisions made by an employee have a finality that goes with unlimited authority and a complete absence of review. The decisions made as a result of the exercise of discretion and independent judgment may consist of recommendations for action rather than the actual taking of action. (29 C.F.R.  541.202(c).) The testimony supports the trial courts conclusion that Paul made recommendations to the engineering department and to customers based on his judgment and discretion.

Paul falls within the reasoning expressed in Lutz v. Ameritech Corp. (6th Cir. Feb. 23, 2000, No. 98-2367) 2000 WL 245485. There, the court upheld summary judgment for the employer finding an employee exempt from overtime. The employee worked as a field engineer for a telecommunications company and was primarily responsible for providing access to the intra-office computer network. He was also a vital player in implementing new programs and solving network problems. The employee argued that he simply installs, maintains, and troubleshoots the hardware and software which makes up Ameritechs intra-company network. Plaintiff argues that he relies on vendor manuals and internal documentation to perform his job duties working within pre-set guidelines created by Ameritech. In contrast, defendant contends that plaintiffs work, in practice, involves a significant amount of discretion and independent judgment for designing, planning, and implementing projects which connect Ameritech employees to its data network and for ensuring that access remains fully viable. In reviewing the parties pleadings, briefs, attachments, and depositions, the district court found that plaintiffs own deposition testimony, job description, and performance evaluations indicated that he assesses the needs of clients, develops installation plans for access to the intra-company network, and coordinates with various departments to arrange installation and ensures that plans are implemented. We agree with the district court that plaintiffs position as a field engineer has many duties calling for independent judgement [sic] and discretion and that defendant Ameritech has met its burden showing that plaintiff exercises independent judgment.

Because we uphold the trial courts conclusion that Paul is exempt from overtime compensation, we need not reach Pauls challenge to the finding that he failed to establish actual overtime hours.

DISPOSITION

The judgment is affirmed. Respondent is entitled to costs on appeal.

SILLS, P. J.

WE CONCUR:

BEDSWORTH, J.

ARONSON, J.

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^[1] The federal regulations under the Fair Labor Standards Act are expressly made applicable to the construction of activities subject to the administrative exemption. (8 C.C.R.  11040(1)(A)(2)(f).)