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Unlicensed Accountants May be Entitled to Overtime under California Law, Federal Court Rules

  • June 30, 2011

Reversing summary judgment for more than 2,000 unlicensed junior accountants in a class action lawsuit, the U.S. Court of Appeals for the Ninth Circuit (San Francisco) has held that the plaintiff-accountants were not “categorically ineligible” to be exempt from overtime under California’s professional and administrative exemptions.  Campbell v. PricewaterhouseCoopers, LLP, No. 09-16370 (9th Cir. June 15, 2011).  The Court ruled the district court erred in determining the unlicensed accountants, who were required by law to work under the supervision of a licensed accountant, could never meet the requirements for exempt employees. The Court warned against categorically excluding entire classes of employees from overtime exemption analyses.

The Facts

Jason Campbell and Sarah Sobek worked as junior, unlicensed accountants for PricewaterhouseCoopers, LLP (“PwC”), an international accounting and professional services firm, in California.  They performed audits for the firm’s clients under the general supervision of licensed accountants.  

Claiming PwC had erroneously classified them as professional or administrative employees exempt from overtime pay under California law, Campbell and Sobek sued PwC for unpaid overtime on behalf of a class of unlicensed junior accountants working in PwC’s California offices (collectively, the “plaintiffs”).  The parties cross-moved for summary judgment on whether the plaintiffs fell within either the professional or administrative exemptions.  The district court found the plaintiffs were “categorically ineligible” for the professional exemption because they were unlicensed.  The district court also found PwC failed to show the plaintiffs fell within the administrative exemption.  PwC appealed.

Professional Exemption

Under California law, to claim the professional exemption, PwC must show that the plaintiffs meet one of the following two criteria:  (1) “licensed or certified by the State of California and primarily engaged in … law, medicine, dentistry,… accounting; or” (2) “primarily engaged in an occupation commonly recognized as a learned or artistic profession.”

PwC argued that, even though the plaintiffs were unlicensed, they should be exempt because they were members of a learned profession.  The Court agreed.  It found the language of the exemption unambiguously indicating “no intent” to exclude accountants from the learned profession provision.  If the drafters intended to exclude the professions listed in the law, the Court said, they could have easily done so by including limiting language.  The drafters did not do so; to the contrary, they used the conjunction “or”, allowing employees to fall within either provision.  The Court concluded the plaintiffs could meet the requirements of the learned profession provision if PwC demonstrated they performed work that is “predominately intellectual and varied in character” and ruled the district court erred in denying PwC the opportunity to prove the plaintiffs fell within the learned profession provision.

The Court further observed that, notwithstanding the unambiguous text, the district court’s conclusion would create “highly problematic” precedent by stating that “unlicensed California employees in all [of the] enumerated professions — including doctors, engineers, and lawyers — would have a compelling argument for mandatory overtime pay.”  The Court declared, “This cannot be the law.”  Interpreting the exemption as the district court did would create “significantly troubling results,” the appeals court wrote.  For example, employers would be required to pay overtime to recent medical school graduates working as residents in hospitals, first year associates at law firms who had not yet passed the bar, or attorneys who relocated temporarily to California to try a case.  The Court explained it could not “endorse a ruling that would open the door” for such employees to sue their employers for overtime pay.  

Administrative Exemption

To claim the administrative exemption for its unlicensed accountants, PwC must show that the plaintiffs: 

  1. performed work “directly related to management policies or general business operations” of either the employer or the employer’s clients; 
  2. “customarily and regularly” exercised discretion and independent judgment; 
  3. worked “under only general supervision” while either: (a) performing work along specialized or technical lines requiring special training, experience, or knowledge, or (b) executing special assignments and tasks; 
  4. were “primarily engaged” in exempt work meeting the above requirements; and
  5. satisfied a minimum salary requirement.  

The Court determined that summary judgment was improper because it was unclear whether the work of the unlicensed accountants was directly related to PwC’s operations or its clients’ operations and whether they worked only under general supervision while performing specialized or technical work.  Accordingly, the Court reversed summary judgment and returned the case for trial.


Determining whether an employee meets any of the overtime exemptions is a fact-intensive process.  Jackson Lewis attorneys are available to assist employers with their wage-and-hour questions and compliance efforts.  

Employers can keep up with California legal developments with the Jackson Lewis California Workplace Law Blog (

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