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There’s one wage-and-hour hot spot the Department of Labor can’t touch: California. Under the Fair Labor Standards Act of 1938, state overtime laws that are more protective of workers trump federal regulations. This means national companies have to be especially vigilant: Two employees with the same titles and job duties who reside in different states could be treated differently. Nowhere has that carve-out had more of an impact than in the Golden State, which has generated most of the recent headline-grabbing payouts in wage-and-hour cases. Starbucks Corp., SBC Pacific Bell, Rite Aid Corp., U-Haul International Inc., and Taco Bell Corp. are just a handful of companies that shelled out millions to settle class actions claiming they cheated workers out of overtime pay. And, in one of the few cases to go to trial, Farmers Insurance Exchange was hit with a $90 million jury verdict, now on appeal, in summer 2001. California’s wage-and-hour laws are much harder on employers. Managers, for instance, must spend at least 50 percent of their time supervising others; there’s no specified amount under federal law, which requires only that management be a “primary” duty. Californians must opt out of class actions, while each individual plaintiff must sign up for federal class litigation. But anxious general counsel can take heart. What the U.S. Department of Labor can’t do, the California Supreme Court might do on its own. Last summer the state high court agreed to decide a case that strikes at the core of what has made these cases so lucrative in California: class certification. State courts generally have been receptive to certification motions based on common job titles and duties. But in a recent case involving Sav-On Drug Stores Inc., a state appellate court held that because the work of a Sav-On assistant or operating manager could vary based on, say, a given store’s size or location, there wasn’t sufficient commonality among potential class members to warrant class certification. A ruling from the California Supreme Court, which agreed to hear the case in July and has indicated it’s on a fast track, could come within the next few months.

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