The Professional Exemption Can Apply to Unlicensed Accountants and Lawyers

The California professional exemption provides that employees can be exempt from overtime laws if, among other things, they are either (i) licensed by the State of California to practice law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; or (ii) primarily engaged in an occupation commonly recognized as a learned or artistic profession.  Until now it has been unclear whether an unlicensed accountant or lawyer could be exempt under the professional exemption.  Two recent cases, one state, one federal, have answered that question by holding that they can be.  The federal case, Campbell v. PricewaterhouseCoopers, LLP, 642 F.3d 820, decided by the Ninth Circuit Court of Appeals on June 15, 2011, held that unlicensed accountants (i.e., persons who perform accounting functions assisting licensed accountants but who are not themselves licensed) could be so exempt.  The California case, Zelasko-Barrett v. Brayton-Purcell, LLP, 198 Cal. App. 4th 58, decided by the California Court of Appeal for the First District on August 17, 2011, held that unlicensed lawyers (i.e., persons who have graduated from law school and who perform legal services assisting licensed lawyers but who have not themselves passed the bar), could be so exempt.  Both of these cases hold that the professional exemption can apply because these types of employees work in occupations commonly recognized as learned professions.  Of course, accounting firms and law firms still need to be cautious in classifying such employees as exempt, because for the exemption to apply, the employer still has the burden to prove that the employee in question (a) was primarily engaged on a weekly basis in exempt duties, (b) was paid the requisite monthly salary (i.e., twice minimum wage), (c) customarily and regularly exercised independent discretion and judgment in his or her job, and (d) was otherwise treated as an exempt employee.  For example, it is unclear whether under Zelasko-Barrett a law clerk who is still in law school could be exempt under the professional exemption (though it has been well settled that a paralegal could not be).  Thus, even with the new precedent set by Campbell and Zelasko-Barrett, there is still enough subjectivity and “grey-area” inherent in the professional exemption to allow unlicensed accountants and lawyers to sue for overtime and other non-exempt employee wages, penalties and benefits.  — Adam Treiger