IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

_________________________________________________
No. 09-16370
_________________________________________________

JASON CAMPBELL AND SARAH SOBEK, ET AL.,

Plaintiffs-Appellees,

v.

PRICEWATERHOUSECOOPERS LLP,

Defendant-Appellant.
______________________________________________________
On Appeal from the United States District Court
for the Eastern District of California, Hon. Lawrence K. Karlton
Case No. 06-CV-02376-LKK-GGH
______________________________________________________
BRIEF OF APPELLEES
JASON CAMPBELL AND SARAH SOBEK, ET AL.
______________________________________________________

WILLIAM A. KERSHAW DAVID C. FREDERICK

LYLE W. COOK SILVIJA A. STRIKIS
STUART C. TALLEY KELLOGG, HUBER, HANSEN, TODD,
KERSHAW, CUTTER & RATINOFF, LLP EVANS & FIGEL, P.L.L.C.
401 Watt Avenue 1615 M Street, N.W., Suite 400
Sacramento, California 95864 Washington, DC 20036
(916) 448-9800 (202) 326-7900

Counsel for Appellees Jason Campbell and Sarah Sobek, et al.

January 29, 2010

UNDER SEAL
 TABLE OF CONTENTS

Page

TABLE OF CONTENTS ........................................................................................... i 

TABLE OF AUTHORITIES ................................................................................... iii 

ISSUES PRESENTED...............................................................................................1 

STATEMENT OF THE CASE ..................................................................................1 

STATEMENT OF FACTS ........................................................................................4 

A.  Attest Associates And The PwC Hierarchy ..........................................4 

B.  Attest Associate Training ......................................................................6 

C.  MyClient And The Audit-Planning Process .........................................7 

D.  The Audit Process ...............................................................................10 

E.  The Audit-Review Process ..................................................................13 

F.  PwC’s Wage-And-Hour Practices.......................................................16 

SUMMARY OF ARGUMENT ...............................................................................17 

STANDARD OF REVIEW .....................................................................................20 

ARGUMENT ...........................................................................................................21 

I.  THE PROFESSIONAL EXEMPTION DOES NOT APPLY TO

ATTEST ASSOCIATES ...............................................................................21 

A.  PwC Failed To Prove That Attest Associates Satisfy The First
Requirement Of The Professional Exemption ....................................22 

1.  The statutory text and structure make the professional

classifications mutually exclusive ............................................23 
 2.  The drafting history confirms that the professional
classifications are mutually exclusive.......................................29 

B.  Even If The Professional Classifications Are Not Mutually

Exclusive, Attest Associates Are Not Exempt Under The
Learned Profession Exemption ...........................................................36 

C.  Any Ambiguity Must Be Resolved In Attest Associates’ Favor ........38 

II.  THE ADMINISTRATIVE EXEMPTION DOES NOT APPLY TO

ATTEST ASSOCIATES ...............................................................................41 

A.  PwC Failed To Prove That Attest Associates Satisfy The Third
Requirement Of The Administrative Exemption ................................43 

1.  PwC’s arguments fail on the merits ..........................................43 

2.  PwC’s arguments are waived ....................................................51 

B.  Any Ambiguity Must Be Resolved In Attest Associates’ Favor ........54 

III.  THE RULES GOVERNING PROFESSIONS OTHER THAN

ACCOUNTING DO NOT HELP PWC ........................................................54 

A.  The Rules Governing Teachers Do Not Help PwC ............................54 

B.  The Rules Governing Lawyers, Engineers, And Other

Enumerated Professions Do Not Help PwC........................................56 

CONCLUSION ........................................................................................................58 

CERTIFICATE OF COMPLIANCE

STATUTORY ADDENDUM

ii
 TABLE OF AUTHORITIES
Page
Cases:

Aramark Facility Servs. v. SEIU, Local 1877, 530 F.3d 817 (9th Cir.
2008) .............................................................................................................. 42

Beecham v. United States, 511 U.S. 368 (1994) ...................................................... 46

Bell v. Farmers Ins. Exch., 105 Cal. Rptr. 2d 59 (Cal. Ct. App. 2001) ................... 49

Bleisner v. Communications Workers of Am., 464 F.3d 910 (9th Cir.

2006) .............................................................................................................. 20

Board of Port Comm’rs v. Williams, 70 P.2d 918 (Cal. 1937) ................................ 28

California Sch. of Culinary Arts v. Lujan, 4 Cal. Rptr. 3d 785 (Cal. Ct.
App. 2003) ..................................................................................................... 32

Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ........................................................ 20

Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) ......................................... 45

Davis v. Michigan Dep’t of Treasury, 489 U.S. 803 (1989) ................................... 24

Earley v. Superior Court, 95 Cal. Rptr. 2d 57 (Cal. Ct. App. 2000) ....................... 39

Eicher v. Advanced Bus. Integrators, Inc., 61 Cal. Rptr. 3d 114

(Cal. Ct. App. 2007) ...................................................................................... 42

Erlenbaugh v. United States, 409 U.S. 239 (1972) ................................................. 47

FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) ....................... 23

Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222 (1957) ..................... 24

Golden Eagle Refinery Co. v. Associated Int’l Ins. Co.,

102 Cal. Rptr. 2d 834 (Cal. Ct. App. 2001)................................................... 37

Gustafson v. Alloyd Co., 513 U.S. 561 (1995)......................................................... 47

HCSC-Laundry v. United States, 450 U.S. 1 (1981) .........................................24, 25

iii
Herrera v. F.H. Paschen/S.N. Nielsen, Inc., No. D051369,
2008 WL 5207359 (Cal. Ct. App. Dec. 15, 2008) ..................................44, 45

Hourani v. United States, 239 F. App’x 195 (6th Cir. 2007),

cert. denied, 128 S. Ct. 2463 (2008).............................................................. 52

Imperial Credit Indus., Inc., In re, 527 F.3d 959 (9th Cir. 2008)............................ 24

INS v. Cardoza-Fonseca, 480 U.S. 421 (1987) .................................................33, 35

IWC v. Superior Court, 613 P.2d 579 (Cal. 1980) .................................................. 39

Leslie v. Commissioner, 146 F.3d 643 (9th Cir. 1998) ............................................ 40

Murphy v. Kenneth Cole Prods., Inc., 155 P.3d 284 (Cal. 2007) ............................ 39

National Ass’n of Home Builders v. Defenders of Wildlife,

551 U.S. 644 (2007)....................................................................................... 29

Nordquist v. McGraw-Hill Broad. Co., 38 Cal. Rptr. 2d 221

(Cal. Ct. App. 1995) ...............................................................................passim

Pacific Gas & Elec. Co. v. State Energy Res. Conservation &
Dev. Comm’n, 461 U.S. 190 (1983) ..................................................18, 33, 34

People v. Arias, 195 P.3d 103 (Cal. 2008) .............................................................. 29

People ex rel. Dep’t of Alcoholic Beverage Control v. Miller

Brewing Co., 128 Cal. Rptr. 2d 861 (Cal. Ct. App. 2002) ............................ 52

Piet v. United States, 176 F. Supp. 576 (S.D. Cal. 1959) ........................................ 26

Ramirez v. Yosemite Water Co., 978 P.2d 2 (Cal. 1999) .......................18, 21, 36, 40

Russello v. United States, 464 U.S. 16 (1983) ...................................................26, 28

Sav-On Drug Stores, Inc. v. Superior Court, 96 P.3d 194 (Cal. 2004) ................... 39

Singh v. Superior Court, 44 Cal. Rptr. 3d 348 (Cal. Ct. App. 2006) ...................... 18

United Sav. Ass’n v. Timbers of Inwood Forest Assocs., Ltd.,

484 U.S. 365 (1988).................................................................................23, 48

iv
United States v. Beckstead, 500 F.3d 1154 (10th Cir. 2007),
cert. denied, 128 S. Ct. 1757 (2008).............................................................. 52

United States v. Washington, 235 F.3d 438 (9th Cir. 2000) .................................... 29

Wainwright v. Sykes, 433 U.S. 72 (1977) ................................................................ 52

White v. County of Sacramento, 646 P.2d 191 (Cal. 1982) ...............................27, 30

Statutes, Regulations, and Rules:

26 U.S.C. §501(c)(3) ............................................................................................... 25

26 U.S.C. §501(e) .................................................................................................... 25

1999 Cal. Stat. 134, §2(g) ........................................................................................ 39

Cal. Bus. & Prof. Code:

§5051 ............................................................................................................. 49

§5051(a)...................................................................................................47, 48

§5051(c)......................................................................................................... 15

§5051(d) ........................................................................................................ 50

§5053 .................................................................................................47, 48, 49

§5054(a)......................................................................................................... 57

§5083 (2009) ................................................................................................. 38

§5093 ............................................................................................................. 38

§5096 ............................................................................................................. 57

§5097 ............................................................................................................. 16

§5120 ............................................................................................................. 49

§6759 ............................................................................................................. 57

v
Cal. Lab. Code:

§61 ................................................................................................................. 32

§510(a)............................................................................................................. 2

§515(a)............................................................................................................. 2

29 C.F.R. §541.2 (2000) .......................................................................................... 45

29 C.F.R. §541.201(a)(2)(i) (2000) ......................................................................... 45

29 C.F.R. §541.301 (2000) ...................................................................................... 27

29 C.F.R. §541.301(e) (2000).................................................................................. 35

29 C.F.R. §541.301(e)(1) (2000) .......................................................................31, 34

29 C.F.R. §541.301(f) (2000)....................................................................331, 34, 35

29 C.F.R. §541.302(c)(1) (2000) ............................................................................. 27

29 C.F.R. §541.302(e)(1) (1988) .......................................................................30, 31

29 C.F.R. §541.302(f) (1988).................................................................................. 31

29 C.F.R. §541.308(a) (2000).................................................................................. 35

Cal. Code Regs., tit. 8, §11040:

§1 .............................................................................................................17, 40

§1(A)(1) ......................................................................................................... 13

§1(A)(2) .....................................................................................................2, 41

§1(A)(2)(a)(i)................................................................................................. 50

§1(A)(2)(d) ........................................................................................19, 48, 53

§1(A)(2)(f) ...............................................................................................34, 45

§1(A)(3) .....................................................................................................2, 22

§1(A)(3)(a)-(b) .............................................................................................. 23

vi
 §1(A)(3)(b) .................................................................................................... 36

§1(A)(3)(b)(i) ..........................................................................................27, 37

§1(A)(3)(b)(ii)-(iii) ........................................................................................ 27

§1(A)(3)(e) ..............................................................................................33, 34

§1(A)(3)(f)-(h) ............................................................................................... 22

§1(A)(3)(h) .................................................................................................... 57

§1(A)(3)(h)(ii) ............................................................................................... 25

§1(A)(3)(i) ..................................................................................................... 25

§2(N)........................................................................................................36, 53

§2(O)........................................................................................................17, 40

§2(R) ........................................................................................................54, 55

Cal. Code Regs., tit.8, §11040, §1(A)(1)-(2) (1989) .............................................. 30

Cal. Rules of Court:

Rule 9.40 ........................................................................................................ 57

Rule 9.46 ........................................................................................................ 56

Rule 9.47(b) ................................................................................................... 56

Rule 9.48(b) ................................................................................................... 56

vii
Other Authorities:
CalCPA, CalCPA Salutes its Top 50, California CPA (Jul. 2009),
http://www.calcpa.org/Content/Files/California
%20CPA%20magazine/0709.top.50.firms.pdf ............................................ 31

Sidney A. Inglis, California Develops the Ryan Reforms, 1966-1970,

available at http://www.ctc.ca.gov/commission/history/1966-
1970-Ryan-Reforms.pdf ................................................................................ 55

Random House Unabridged Dictionary (2d ed. 1993) ............................................ 47

Norman J. Singer, Statutes and Statutory Construction:

(5th ed. 1991) ................................................................................................. 46

(6th ed. 2000) .....................................................................................26, 40, 47

State Bar of California, Multijurisdictional Practice (MJP) Program,

http://calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=12441
(visited Dec. 29, 2009) ................................................................................... 56

viii
 ISSUES PRESENTED

1. Whether the District Court correctly concluded that junior, unlicensed

accountants do not satisfy the “Professional Exemption” from California’s

mandatory overtime laws, when the text, structure, and drafting history of that

exemption limit its application to licensed accountants.

2. Whether the District Court correctly concluded that junior, unlicensed

accountants do not satisfy the “Administrative Exemption” from California’s

mandatory overtime laws, when the employer failed to carry its burden to show

that highly supervised and comprehensively controlled employees “perform[]

under only general supervision work along specialized or technical lines.”

STATEMENT OF THE CASE

This case concerns application of California’s rules for overtime pay to

junior accountants. Plaintiffs-Appellees represent a class of approximately 2,000

of the junior-most, unlicensed accountants in the California offices of

PricewaterhouseCoopers LLP (“PwC”). The class members are “Associates” in

PwC’s “Attest” (i.e., auditing) division, who form the bottom-most rung in a

seven-rung hierarchical ladder of PwC’s full-time Attest employees. Given their

youth and inexperience, Attest Associates’ typical daily activities are routine and

highly nondiscretionary: they read detailed instructions from a computerized audit

plan; they search through boxes of documents in accordance with the audit plan;
they find the financial documents specified in the audit plan; they check a series of

boxes to verify that they completed each of the steps specified in the audit plan;

and then they send the completed checkboxes, along with supporting

documentation, to their supervisors for multiple levels of review. Such work often

entails long overtime hours, for which PwC does not compensate them.

Attest Associates brought this lawsuit against PwC under the California

Labor Code, which requires employers to provide overtime pay to any employee

who works more than 40 hours per week, see Cal. Lab. Code §510(a), and

authorizes the California Industrial Welfare Commission (“IWC”) to establish the

parameters for any exemptions from that requirement, see id. §515(a). PwC

asserted that the Attest Associates were exempt from California’s mandatory

overtime provisions based on an IWC regulation known as Wage Order 4-2001,1

which provides exemptions from overtime pay for limited categories of

“professional”2 and “administrative”3 employees.

On cross-motions for summary judgment, the District Court entered

judgment for the Attest Associates. The court held that the “Professional

1
Codified at Cal. Code Regs., tit. 8, §11040 (hereinafter “Wage Order”).
Unless otherwise indicated, citations to the Wage Order or §11040 refer to the
2001 version of the IWC’s order. The Wage Order and other relevant statutes and
authorities are reproduced in the attached Statutory Addendum.
2
See Wage Order §1(A)(3) (hereinafter “Professional Exemption”).
3
See id. §1(A)(2) (hereinafter “Administrative Exemption”).

2
Exemption” set forth in the Wage Order applies only to those accountants who are

“licensed or certificated” by the State of California to practice public accountancy,

a requirement that the class members, by definition, do not meet. The court further

held that PwC failed to carry its burden under the Wage Order’s “Administrative

Exemption” to prove that Attest Associates “perform[] under only general

supervision work along specialized or technical lines.” In reaching that

conclusion, the court emphasized that the routine, highly supervised tasks

performed by Attest Associates are very different from the “specialized or

technical” work performed by other professionals—such as tax experts and foreign

exchange consultants—who do satisfy the Administrative Exemption.

None of PwC’s arguments on appeal warrants reversal. First, PwC argues

that Attest Associates satisfy the Professional Exemption because—

notwithstanding the routine and nondiscretionary nature of their work—PwC

claims that they are functionally indistinguishable from fully licensed accountants,

doctors, lawyers, and engineers. As a matter of law, however, the text, structure,

and drafting history of the Professional Exemption limit its application to licensed

accountants, and Associates are not licensed.

Second, PwC argues that Attest Associates satisfy the Wage Order’s

Administrative Exemption because they work “under only general supervision”

despite up to six layers of managers who are responsible for Associates’ work.

3
That argument fails, however, because PwC has not pointed to sufficient evidence

to create a triable issue of fact that Associates “work along specialized or technical

lines”—much less that they do so “under only general supervision”—as required

by the Administrative Exemption.

The District Court’s judgment should be affirmed.

STATEMENT OF FACTS

A. Attest Associates And The PwC Hierarchy

Plaintiffs-Appellees represent a class of employees who worked as Attest

Associates in the California offices of PwC between 2002 and 2008. A typical

Attest Associate is a recent college graduate with zero or one year of work

experience and whose educational background does not necessarily include

extensive coursework in accounting. See SER11-12; SER89-93.4 Indeed, PwC

concedes that as many as 30% of the class members neither majored nor minored

in accounting. See SER113-14.

These Associates sit on the very bottom step of a seven-level employee

hierarchy in PwC’s Attest Division. They are supervised by (in ascending order of

seniority and authority) Senior Associates, Managers, Senior Managers, Directors,

Managing Directors, and Partners. See ER3. The top five levels—from Manager

upwards—include only licensed accountants (i.e., certified public accountants, or

4
“SER” refers to Plaintiffs-Appellees’ Supplemental Excerpts of Record.
“ER” refers to PwC’s Excerpts of Record.

4
“CPAs”). Attest Associates, by definition, are not CPAs. See ER5. Like PwC’s

Associates, its part-time student interns also are unlicensed and occupy the same

position at the bottom of the Attest Division pecking order. See, e.g., SER85.

PwC uses the same job description for both Associates and interns in the firm’s

recruiting materials. See SER87. For reasons that PwC has never explained,

however, it pays overtime wages to its student interns but not its Associates. See

SER93; SER98.

PwC refers to each audit that Attest employees perform as an “engagement.”

ER5. To perform each engagement, PwC creates a team of licensed and

unlicensed accountants who obey a well-defined chain of command, dictated in

large part by rules of professional conduct that CPAs must follow. See ER39

(quoting professional standards). In ascending order of seniority and authority, the

“team member[s]” answer to one or more “team manager[s]” who in turn answer to

the “engagement leader.”5 SER40. Depending on the size and complexity of the

project, PwC also may assign a “[c]oncurring review partner,” an “[i]ndependent

reviewing partner,” and/or one or more “[k]nowledge broker[s].” Id.; see SER41-

55. In any event, PwC’s junior-most Attest Associates always fall at the very

bottom of the engagement team hierarchy and serve only as “team members.”

5
An “engagement leader” is typically a Partner and is never an Associate.
See SER29; see also SER58 (describing role of “[e]ngagement [l]eader”).

5
SER40; SER100; see also SER73 (emphasizing PwC’s “top-down management-

focused audit approach”).

B. Attest Associate Training

Before they can work as team members, Attest Associates must be trained to

use PwC’s proprietary auditing software. The principal component of that training

is a two-week course called “Go Audit.” SER21-22. During Go Audit training,

Associates are told that PwC’s software will “prescribe[] ‘what you will do’ and

‘how you will do it.’” SER84; see also SER98. PwC’s software not only dictates

to the Associate what to do and how to do it, but it also predicts the precise result

of each of the Associate’s preprogrammed steps. See SER102-03.

PwC uses the term “exception” to describe a circumstance in which the

Attest Associate reaches a result that deviates in any way from the one predicted

by PwC’s software. E.g., SER76. In such circumstances, the Associate must refer

to his or her supervisor for further instructions. Indeed, one of the “Top 10” items

that Go Audit instructors are required to emphasize when training new Associates

is: “When you find ANY exception, you must talk to your senior/supervisor. Do

not try to solve it on your own. There is much risk if you do. There are no isolated

exceptions.” SER79-80; see also SER76 (According to the Go Audit manual, if an

Associate identifies an “exception,” he or she “should always consult with [a] team

manager.”); SER98 (As an Attest Associate, “I was trained that if a client’s

6
information [i]s incomplete or I got an unexpected answer, I was to document that

in the software and report it to my supervisors.”); SER107 (“I was instructed at my

initial training that I must talk to my supervisor if I found any significant

discrepancy or exception while doing my assigned testing on an audit. I was told

that I should not try to solve these issues on my own because there was too much

risk, and that there were no exceptions to this policy.”).

Between 2003 and early 2007, PwC’s full-time Attest Associates and its

part-time student interns received the exact same Go Audit training. They sat

together in the same classroom and used the same training materials. See SER23-

24. PwC performed Go Audit training for new Associates and interns in separate

classrooms after the summer of 2007—but, even then, the content of the training

received by both groups was “substantially the same.” SER24.

C. MyClient And The Audit-Planning Process

The principal purpose of Go Audit training is to teach interns and Attest

Associates to use the “MyClient” application. The MyClient application is

designed to walk Associates and interns through the “Audit Plan,” which consists

of a number of nondiscretionary auditing “Steps” that have been predetermined by

Managers (or more senior CPAs). See SER66-68; SER76; SER99. PwC’s junior-

most Associates have little or no substantive input in the audit-planning process.

According to one former Attest Associate:

7
 If I was ever in a high[-]level meeting where the audit was actually
being planned, either conceptually or logistically, I was there simply
to observe or take notes. I understood that it was not my place as an
[A]ssociate to suggest to my supervisors how I thought an audit
should be planned or performed. For instance, it would be totally out
of place for me to suggest to a [M]anager, at a planning meeting or
otherwise, that we should be spending less time on cash and more
time on inventory on a particular audit.

SER100. To the extent Associates are allowed to say anything during the audit-

planning process, they are permitted only to make take-it-or-leave-it

“recommend[ations].” ER202.6 As with every significant decision in the Attest

Division, ultimate audit-planning authority resides with Associates’ supervisors.

See, e.g., ER203; SER99-101.

Once an Audit Plan is established, Attest Associates implement the basic

work described in the Steps of that plan. PwC’s training manual defines a “Step”

as “a specific procedure containing a detailed description of the audit work to be

performed.” SER66; see also SER76 (A “step provides detailed guidance to the

team member doing the work as to the nature, timing, and extent of procedures

performed.”). For example, the Step for testing sales and accounts receivable for

an engagement may direct an Associate or intern to examine shipping documents,

6
Associates with a year or more of experience in certain circumstances
receive somewhat greater substantive responsibilities, such as “drafting a proposed
testing plan for the accounts I had selected for testing.” ER202. Such Associate-
made proposals, however, are based almost exclusively on “Audit Plans for PwC
clients [that] were simply ‘rolled forward’ from the previous year.” SER99; see
also SER100 (“It was clear from reviewing the current and past year’s plans for
many clients that they were often nearly identical.”).

8
match the shipping documents to the corresponding sales invoices, and then match

the sales invoice reference numbers to entries in the client’s sales journal. See

SER78.

PwC’s CPAs typically use templates to standardize Steps across

engagements, but sometimes CPAs must plan “tailored procedures” that address

“client specific details.” SER68. “For example, [a] tailored procedure might

instruct [an Attest Associate] to obtain certain information from a particular

accounts receivable (‘AR’) clerk at the client.” SER100-01. Tailored procedures

are chosen and implemented only by Managers (or more senior CPAs). See

SER68. Associates are tasked only with “understand[ing] … the procedures,” id.,

and with making ministerial or clerical updates if necessary, see SER101 (“If I

went to the client and found that the previous AR clerk had left that department or

the company, I would change the name in the tailored step to reflect the name of

the person who actually provided the information.”); see also SER95. According

to an internal PwC document, entitled “Top 10 tips of successful documentation,”

even an Associate’s ministerial updates to the “tailored procedures” require

supervision and review by the Associate’s superiors: “As you are doing your work

update the ‘tailored procedures’ field for any client specific information that you

have used e.g. the name of the client staff that provided the information, the name

9
of the reports you used etc. You should discuss changes with the person who is

coaching you and reviewing your work.” SER81.

D. The Audit Process

Attest Associates’ contribution to an audit consists of following assigned

Steps developed by CPAs and displayed by the MyClient software. See SER66

(“Steps are the basis for the entirety of the work to be performed on your client.”).

At the beginning of the audit, the engagement leader or manager convenes a

meeting and assigns a series of Steps to each Associate. See SER100. From that

point forward, “[o]n any audit, upwards of ninety percent (90%) of [an

Associate’s] time [i]s spent sitting at [a] computer, going through [his or her]

assigned steps in PwC’s propriety software.” SER102; see also SER65.

Each Step generally asks an Associate to choose from various options listed

in non-editable “dropdown menus.” For example, an Associate assigned to help

audit a client’s accounts receivable may complete the “section” component of a

Step by choosing “accounts receivable” from the dropdown menu options. See

SER66-67. Sometimes, Associates may enter limited data into MyClient—for

example, according to PwC’s training manual, a Step may “allow[] you to insert

numbers which can then be used to sort the documents in a sequence other than

alphabetical order.” SER67.

10
 Attest Associates generally perform only Steps that have been identified as

low-risk during the audit-planning process. See SER56. The “KEY RISKS”

section of PwC’s training manual “is … very short … because it is not expected

that the new hires will be involved in identifying key risks in their first year.”

SER71-72. An Associate who recognizes a potentially high-risk audit issue—a

situation that rarely occurs—must flag it (using one of three non-editable

categorizations in MyClient) for review by a supervisor. See SER69; SER73 (“As

a team member, if you identify a key risk during the engagement, you should

discuss this with your team manager to determine how to proceed.”); SER107-08

(similar instructions).

Even in low-risk areas, Attest Associates have no discretion to deviate from

the Audit Plan or MyClient’s computerized Steps. According to one former

Associate:

The work of performing an audit at PwC followed the same

basic steps, regardless of the client, the sections I was assigned to, or
the tests I was to perform.… I would be assigned a number of
specific steps to complete within the MyClient file. The steps would
specifically tell me what data I needed and where to get it. The steps
specified what size of sample I would need to test and which tests to
perform on that sample. The steps also told me what to look for when
I was testing a sample, what to do if I found what I was looking for,
and what to do if I didn’t find what I was looking for. For example,
the step would say: if you found result A, then do procedure X to
complete the step, but if you found result B, then do procedure Y to
complete the step. I would perform procedure X or procedure Y, not
necessarily because one was more appropriate in my own judgment,
but because the instructions of the step dictated it. If any of this

11
 guiding information was unclear or was not in the specific steps
within MyClient, then I could obtain it from another area of PwC’s
software (for example, in another database such as Template
Manager[7]) or from my superiors.

SER102; see also SER94 (same). An Associate must complete all required Steps

and may “not delete required steps from the MyClient File,” even if the Associate

believes that the Step is inapplicable. SER69; see also SER66; SER101. After

completing a Step, the Associate uses a button called “Mark As” to mark the Step

as “completed” in MyClient. See SER64; SER68.

Attest Associates and student interns perform “nearly identical” tasks for

PwC during the audit process. SER98; see also SER37-38. One former PwC

employee, for example, testified that she spent 80-90% of her time—both as an

intern and as a new Associate—performing “ticking and tying.” SER93. “Ticking

and tying is comparing an account balance from a source document (such as [a]

bank confirmation) to a summary reconciliation or to a general ledger. Essentially,

it is comparing one number to another number to see if they agree. It is a very

tedious activity.” Id.8

7
According to PwC, “there’s a button [that an Attest Associate] can push to
go directly to Template Manager from MyClient”; PwC uses Template Manager as
a “repository … to house various templates related to the audit process” and directs
Attest Associates to use those templates in performing the predetermined “Steps”
required by MyClient. SER27-28.
8
In certain rare circumstances, PwC sometimes allows an Attest Associate
to be “in charge” of the “day-to-day” activities of an engagement, subject (as
always) to supervision and review by superiors. ER5. Such Associates are “in

12
E. The Audit-Review Process

In addition to providing Attest Associates with extraordinarily detailed

instructions before and during the audit process, PwC also uses a lengthy and

iterative audit-review process to check and recheck the results of Associates’ work.

As soon as an Associate uses the “Mark As” button to designate a Step as

“complete,” MyClient displays a green dot next to the Step. See SER64;

SER106-07. Once a Step is marked with a green dot, one or more of the six

supervisory levels above an Associate will begin reviewing the Step. The

reviewer(s) may respond to an Associate’s work in one of three ways.

First, the supervisor(s) may log into MyClient and append a “Coaching

Note” to the Step under review. Coaching Notes provide additional procedures—

on top of the detailed ones laid out in the Step itself—that an Attest Associate must

complete. See SER57; SER70. When an audit supervisor creates one or more

Coaching Notes, MyClient displays a red “X” next to the Step. See SER64;

SER107. The red X disappears only after the Associate performs the additional

procedures in accordance with the precise instructions set forth in the Coaching

Note(s). See SER70. According to PwC’s internal policy manual, Coaching Notes

charge” in name only because, by PwC’s own admission, if “any problems …

ar[i]se,” the Associate must call a Manager to resolve them. ER189. PwC
nonetheless relied on such evidence below to justify its invocation of the
“Executive Exemption.” See SER123-24 (citing Wage Order §1(A)(1)). The
District Court rejected PwC’s argument and evidence, see ER33-34, and PwC does
not appeal that conclusion here.

13
provide Associates with exacting, step-by-step instructions to further complete an

audit Step, and also help Associates “discover knowledge and develop [the]

decision-making and judgment skills,” a function that recognizes Associates’ youth

and inexperience. SER57.

Second, the supervisor(s) may conduct one-on-one interviews with the

Associate to determine “both the quality of the work done and the quality of the

documentation in the Client [F]ile.” SER74. According to PwC, it uses “[a]

series” of these “question and answer” sessions to review “[a]ll of the work” that

an Associate records in MyClient. Id. Moreover, these interviews are not limited

to the documents and checkboxes included in MyClient—rather, supervisor(s) also

may demand to see Associates’ “‘rough’ or ‘desk file,’” which should include

every note, document, and piece of evidence that an Associate sees during the

engagement. Given the exacting detail and extensiveness of the “review … by

interview” process, PwC’s training manual on the subject repeatedly warns

Associates to maintain meticulous and clearly organized records “to ensure

reviewers will be capable of reviewing the work and be satisfied when reviewing.”

SER75; see also SER59-61.

Supervisors utilize a separate—but at least as vigorous—“review by

interview” process on the rare occasions when its junior-most Attest Associates

have any direct communication with a PwC client. In their first year or so at PwC,

14
Attest Associates have little or no direct communication with the firm’s clients9

and are only allowed to contact the client directly when specifically instructed to

do so by the Audit Plan or a supervisor. According to a former Associate, in the

exceptional circumstances where such direct client contact is authorized:

[M]y supervisor would often tell me what questions to ask [the client]
and how to ask them. After I was done with the interview, I would
talk to my supervisors about the information I had received. If my
supervisor determined the information I had obtained was sufficient, I
would be instructed to document it. If my supervisor determined the
information was insufficient, I would be instructed to return to the
employee I had interviewed or to another employee who might have
more information.

SER104. PwC allows its more-experienced Associates to talk to clients more

regularly—but, in any event, Associates may never communicate substantive

opinions or audit-related advice to clients; rather, under strict guidance and

supervision, they only may receive information from clients. See SER16; SER18;

SER25-26; SER32-34; SER105-06; Cal. Bus. & Prof. Code §5051(c) (only a CPA

may provide audit-related services to clients).

Third, after an Attest Associate has completed each specific procedure listed

in a Step and any Coaching Notes, after one or more of the Associate’s supervisors

9
See SER96 (“I did not conduct client interviews during my first year as an
Attest associate at PwC. However, I do recall ‘shadowing’ a few interviews with
other more senior members of the engagement team. I was not involved in the
question and answer dialogue. My role was to observe and take notes of the
meeting.”). According to PwC’s training manual, Associates “[a]t most” will “be
responsible for taking notes during the [client] interview [they] observe.” SER82.

15
have conducted “reviews by interview,” and after all of the relevant supervisors are

satisfied with both the results and the documentation of the Associate’s work,

MyClient will—finally—display a green check mark next to the Step. See SER64;

SER107. After receiving green checkmarks for each assigned Step, the

Associate’s work on the engagement is done.

All of an Attest Associate’s work product—namely, a series of checkboxes,

standardized forms, and any supporting documentation that the Associate might

upload to MyClient—becomes a part of PwC’s internal “Client File,” which PwC

does not disclose to anyone outside the firm. See SER70; Cal. Bus. & Prof. Code

§5097. The Client File’s purpose is to empower the CPAs who supervise

Associates to double- and triple-check that each Step was performed correctly

before using those Steps as bases for developing audited financial statements. See

SER56; SER62; SER103. PwC sends only the financial statement—and none of

the Attest Associates’ work product—to its clients. See SER103.

F. PwC’s Wage-And-Hour Practices

The record contains no evidence of when, why, or how PwC decided to treat

Attest Associates as exempt from California’s mandatory overtime laws, see

SER6-10, nor does the record reveal when, why, or how PwC decided to treat its

student interns as non-exempt. PwC could not identify who was responsible for

the firm’s exemption decisions. See SER6. And PwC is unaware of any legal

16
analysis conducted by it or its lawyers prior to PwC’s exemption decisions and this

litigation. See SER14-15. Indeed, PwC could not identify a single document,

study, or non-litigation-related analysis that it ever created or conducted to justify

its decision to exempt Associates from overtime pay requirements. See SER13.

The record of PwC’s wage-and-hour practices consists only of the firm’s

post-hoc, litigation-related assertions. And, even in the context of this litigation,

PwC has never addressed why different overtime regimes should apply to two

categories of employees with identical job descriptions, who are trained side-by-

side and who are expected to perform substantially identical tasks.

SUMMARY OF ARGUMENT

The IWC’s Wage Order requires the payment of overtime to “all persons

employed in professional, technical, clerical, mechanical, and similar occupations,”

specifically including all “accountants.” Wage Order §§1, 2(O) (emphasis added).

Thus, Attest Associates are entitled to overtime unless PwC can prove that they fall

“plainly and unmistakably within the[] terms” of the Professional Exemption or

the Administrative Exemption. Nordquist v. McGraw-Hill Broad. Co., 38 Cal.

Rptr. 2d 221, 226 (Cal. Ct. App. 1995). PwC’s arguments fail on both fronts.

I.A. The Professional Exemption’s first element requires PwC to prove

that the profession of accounting falls within one of three mutually exclusive

classifications: the “enumerated” professions, the “learned” professions, or the

17
“artistic” professions. The Wage Order’s text and structure prove that those three

professional classifications do not overlap—that is, the legislature did not intend

for a given profession to satisfy more than one classification.10 Because

“accounting” is specifically mentioned as an “enumerated” profession, it is not also

a “learned” profession under the statute. Indeed, the Wage Order’s drafting history

demonstrates that the IWC considered—and specifically rejected—regulations that

would have made accounting a “learned” profession. This Court should not read

the Wage Order to embrace a result the IWC itself rejected. See, e.g., Pacific Gas

& Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 220

(1983).

I.B. Even if accounting could be a “learned” profession, Attest Associates

do not satisfy the Professional Exemption because PwC failed to support below

that Associates “primarily” perform exempt work. Moreover, the Wage Order

differentiates “learned” professionals from “apprentices,” and PwC conceded

below that Associates are “apprentices.” Therefore, even if PwC is correct that the

“learned” profession provision applies in this case (and it does not), the record

10
Under California law, the IWC is a “quasi-legislative” body, and its wage
orders must be construed like statutes. See Singh v. Superior Court, 44 Cal. Rptr.
3d 348, 351 (Cal. Ct. App. 2006); see also Ramirez v. Yosemite Water Co., 978
P.2d 2, 8 (Cal. 1999) (explaining the special rules of statutory interpretation that
apply to wage orders).

18
makes clear that the class members are non-exempt and the District Court’s

judgment must be affirmed.

I.C. At most, if this Court concludes that the Wage Order is ambiguous,

under well-established principles of California law, any ambiguity in the

Professional Exemption must be construed in favor of extending the Labor Code’s

overtime provisions to protect Attest Associates. See, e.g., Nordquist, 38 Cal.

Rptr. 2d at 225-26. Thus, PwC’s Professional Exemption claim has no merit.

II.A. PwC’s claim under the Administrative Exemption also fails. PwC

focuses on the third (of five) Administrative Exemption requirements, under which

PwC must prove that Attest Associates “perform[] under only general supervision

work along specialized or technical lines requiring special training, experience, or

knowledge.” Wage Order §1(A)(2)(d). That requirement is satisfied only where

an employee provides expert advice and consultancy services for PwC’s

management or its clients, a standard the highly routinized and nondiscretionary

tasks performed by Attest Associates do not meet. In any event, PwC waived

those arguments by failing to raise them properly below.

II.B. As with the Professional Exemption, any ambiguity in the

Administrative Exemption must be construed in favor of covering the Attest

Associates. See supra Part I.C.

19
 III. PwC’s reliance on the rules governing professions other than

accounting is misplaced. First, PwC misreads the IWC’s separate licensing

requirement for teachers, which reflects the unique regulatory history of teacher

credentialing in California. Second, PwC’s “parade of horribles” concerning other

professionals lacks merit and does not alter the outcome here.

STANDARD OF REVIEW

This Court reviews the District Court’s interpretation of California law de

novo and “may affirm on any ground supported by the record.” Bleisner v.

Communication Workers of Am., 464 F.3d 910, 913 (9th Cir. 2006). Affirming the

District Court’s grant of summary judgment is appropriate where PwC “has failed

to make a sufficient showing on an essential element of [its] case with respect to

which [it] has the burden of proof.” Celotex Corp. v. Catrett, 477 U.S. 317, 323

(1986).

In interpreting the California Labor Code and the Wage Order, the

California Supreme Court has emphasized three principles: First, “in light of the

remedial nature of the legislative enactments authorizing the regulation of wages,

hours and working conditions for the protection and benefit of employees, the

statutory provisions are to be liberally construed with an eye to promoting such

protection”; second, “exemptions from statutory mandatory overtime provisions

are narrowly construed”; and third, “the assertion of an exemption from the

20
overtime laws is considered to be an affirmative defense, and therefore the

employer bears the burden of proving the employee’s exemption.” Ramirez, 978

P.2d at 8 (internal quotation marks omitted).

ARGUMENT

I. THE PROFESSIONAL EXEMPTION DOES NOT APPLY TO

ATTEST ASSOCIATES

The District Court correctly concluded that the Wage Order’s Professional

Exemption to overtime pay does not apply to Attest Associates. As relevant here,

the Professional Exemption applies only to an employee “who meets all of the

following [three] requirements”:

 First, the employee must fall within one of the following professional

classifications:

o The employee is “licensed or certified” by the State of California in

the “recognized profession” of “accounting” (subsection (a)); or

o The employee is “primarily engaged in an occupation commonly

recognized as a learned … profession,” requiring “knowledge of an

advanced type … as distinguished from … training in routine mental,

manual, or physical processes” (subsection (b)).

 Second, the employee must “customarily and regularly exercise[]

discretion and independent judgment” in the work described in the first

requirement (subsection (c)).

21
  Third, the employee must earn a certain minimum salary (subsection

(d)).11

Attest Associates do not meet those requirements. The text, structure, and

drafting history of the first requirement demonstrate that Associates do not fall

within its definitions. Associates also do not meet the second requirement that

they “customarily and regularly exercise[] discretion” in their employment, and

PwC failed to present sufficient argument or evidence on this issue before the

District Court. Moreover, under California law, the employer has the burden to

prove unambiguously that the Professional Exemption applies. PwC has not met

that demanding standard with respect to the Associates.

A. PwC Failed To Prove That Attest Associates Satisfy The First

Requirement Of The Professional Exemption

To meet the Professional Exemption’s first requirement, PwC must prove

that an Attest Associate is an employee:

(a) Who is licensed or certified by the State of California and is

primarily engaged in the practice of one of the following recognized
professions: law, medicine, dentistry, optometry, architecture,
engineering, teaching, or accounting; or

11
Wage Order §1(A)(3) (emphasis added). PwC does not claim (nor could
it) that Attest Associates fall within the “artistic” professions recognized in
subsection (b), and the salary requirement in subsection (d) is not contested. The
Wage Order also imposes separate, special “requirements” for pharmacists, nurses,
and employees in the computer-software field, see id. §1(A)(3)(f)-(h), none of
which is contested here.

22
 (b) Who is primarily engaged in an occupation commonly recognized
as a [(i)] learned or [(ii)] artistic profession.

Wage Order §1(A)(3)(a)-(b). Thus, PwC must prove that Attest Associates work

within one of three professions: the specifically enumerated professions in

(a) (hereinafter the “enumerated” professions); the “learned” professions in (b)(i);

or the “artistic” professions in (b)(ii). The text and structure of the three

professional classifications demonstrate that they are mutually exclusive—that is,

no profession can be categorized in more than one—and, because accounting is

specifically enumerated in (a), it cannot also fall within (b)(i) or (b)(ii). Indeed, the

drafting history confirms that the IWC intended the “learned” and “artistic”

professions to include professions other than the enumerated ones and that the

IWC intended all unlicensed accountants to remain subject to the Labor Code’s

overtime requirements.

1. The statutory text and structure make the professional

classifications mutually exclusive

a. The Professional Exemption’s first requirement has two clauses—in

subsections (a) and (b)—neither of which can be interpreted in a vacuum. Because

statutory interpretation “is a holistic endeavor,” United Sav. Ass’n v. Timbers of

Inwood Forest Assocs., Ltd., 484 U.S. 365, 371 (1988), this Court “should not

confine itself to examining [the component parts of the first ‘requirement’] in

isolation,” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132 (2000).

23
Rather, this Court must read the first “requirement,” in its full and proper context,

as a complete sentence. See, e.g., Davis v. Michigan Dep’t of Treasury, 489 U.S.

803, 809 (1989) (rejecting appellant’s attempt to construe one clause of statute

without reference to second clause in same sentence).

Reading subsections (a) and (b) together, the professions specifically

enumerated in the former cannot also fall within the latter. It is well-established

that “[s]pecific terms prevail over the general in the same … statute which might

otherwise be controlling.” Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S.

222, 228-29 (1957) (internal quotation marks omitted); see also In re Imperial

Credit Indus., Inc., 527 F.3d 959, 974 (9th Cir. 2008) (emphasizing that a specific

provision controls over a general one within the same statutory section). Here, the

IWC recognized eight specific and enumerated professions in subsection (a),

followed by two general categories of “learned” and “artistic” professions in

subsection (b). Because accounting is specifically enumerated in subsection (a),

Attest Associates are exempt, if at all, only if they meet the requirements of

subsection (a). PwC cannot shoehorn them into the more general requirements for

other, unenumerated professions in subsection (b).

The Supreme Court has required precisely that result on analogous facts. In

HCSC-Laundry v. United States, 450 U.S. 1 (1981) (per curiam), a nonprofit

hospital laundry company sought tax-exempt status under the Internal Revenue

24
Code (“IRC”). IRC §501 contained two provisions—one specifically addressing

nonprofit hospital service companies, see 26 U.S.C. §501(e), and one concerning

nonprofit corporations more generally, see id. §501(c)(3). The hospital laundry

company conceded that it could not meet the strictures of the more specific

statutory provision but argued that it was nonetheless exempt under the more

general one. The Court rejected that argument and held that “subsection (e) is

controlling and exclusive,” because “it is a basic principle of statutory construction

that a specific statute, here subsection (e), controls over a general provision such as

subsection (c)(3), particularly when the two are interrelated and closely

positioned.” 450 U.S. at 6.

Moreover, if the IWC had intended for employers to pick and choose how

they wanted to satisfy subsections (a) and (b), the IWC knew how to say so.

Elsewhere in the Professional Exemption, the IWC included language allowing

employers to choose between “one or more” of the specified requirements.12 Thus,

the IWC could have prefaced the Professional Exemption’s first requirement by

allowing employers to classify employees in “one or more” of the professions

recognized in subsection (a) or (b)—that is, specifically to provide that an

12
See Wage Order §1(A)(3)(h)(ii) (providing that a computer software
employee is exempt if he or she “is primarily engaged in duties that consist of one
or more of” three alternatives); see also id. §1(A)(3)(i) (providing that a computer
software employee is not exempt “if any of the following [six alternatives] apply”).

25
employee could work simultaneously in an “enumerated” profession and/or a

“learned” profession and/or an “artistic” profession. The IWC’s decision not to do

so is probative of its intent to make subsections (a) and (b) mutually exclusive.

See, e.g., Russello v. United States, 464 U.S. 16, 23 (1983) (“[W]here Congress

includes particular language in one section of a statute but omits it in another

section of the same Act, it is generally presumed that Congress acts intentionally

and purposely in the disparate inclusion or exclusion.”) (internal quotation marks

omitted); 2A Singer, Statutes and Statutory Construction §46.06, at 194 (6th ed.

2000) (“Singer”).13

b. The IWC’s intention to recognize three categories of mutually

exclusive professions is further confirmed by the text of subsection (b), which

makes clear that the “learned” and “artistic” professions are mutually exclusive of

one another.

According to the Wage Order, a “learned” profession “primarily” involves

“knowledge of an advanced type in a field or science or learning customarily

13
PwC nevertheless claims (at 25-28) that the word “or,” which disjoins the
“enumerated” and “learned” profession provisions, has a single plain meaning that
allows PwC to avoid the license requirement for the enumerated professions. As
the District Court noted, however, the meaning of the word “or” is not invariable
and is informed by its context. See ER19 n.5 (The word “‘or’ has two meanings.
An inclusive—or means ‘either A, or B, or both A and B.’ [And a]n exclusive—or
means ‘either A or B, but not both A and B.’”). For the reasons set forth above,
the IWC clearly intended to use “or” in the exclusive sense. See Piet v. United
States, 176 F. Supp. 576, 583 (S.D. Cal. 1959).

26
acquired by a prolonged course of specialized intellectual instruction and study.”14

An “artistic” profession, on the other hand, involves “primarily … the performance

of work that is original and creative in a recognized field of artistic endeavor,” that

is also “predominantly intellectual and varied in character.”15

14
Wage Order §1(A)(3)(b)(i). The full text provides: A “learned
professional” is “an employee who is primarily engaged in the performance of
[w]ork requiring knowledge of an advanced type in a field or science or learning
customarily acquired by a prolonged course of specialized intellectual instruction
and study, as distinguished from a general academic education and from an
apprenticeship, and from training in the performance of routine mental, manual, or
physical processes, or work that is an essential part of or necessarily incident to
any of the above work.”
15
Id. §1(A)(3)(b)(ii)-(iii). The full text is as follows: An “artistic
professional is “an employee who is primarily engaged in the performance of
[w]ork that is original and creative in character in a recognized field of artistic
endeavor (as opposed to work which can be produced by a person endowed with
general manual or intellectual ability and training), and the result of which depends
primarily on the invention, imagination, or talent of the employee or work that is
an essential part of or necessarily incident to any of the above work; and [w]hose
work is predominantly intellectual and varied in character (as opposed to routine
mental, manual, mechanical, or physical work) and is of such character that the
output produced or the result accomplished cannot be standardized in relation to a
given period of time.”
The former federal regulations, which the IWC intended to be consistent
with subsection (b), make clear that the “predominantly intellectual” requirement
applies only to the “artistic” professions. See 29 C.F.R. §541.302(c)(1) (2000)
(incorporating the “predominantly intellectual” requirement into the “artistic”
profession classification); compare 29 C.F.R. §541.301 (2000) (omitting the
“predominantly intellectual” requirement from the “learned” profession
classification). That reading also is consistent with the “last antecedent” rule. See
White v. County of Sacramento, 646 P.2d 191, 193 (Cal. 1982) (“A longstanding
rule of statutory construction—the ‘last antecedent rule’—provides that ‘qualifying
words, phrases and clauses are to be applied to the words or phrases immediately
preceding and are not to be construed as extending to or including others more

27
 These definitions contain two key differences. First, they set forth different

“intellectual” requirements: “learned” professions require “specialized intellectual

instruction and study,” while “artistic” professions involve work that is

“predominantly intellectual.” Second, “artistic” professions include a requirement

embodying the concepts of performance, originality, and creativity that has no

analog in the definition of “learned” professions.

Because of these definitional differences, no profession can qualify as both

“learned” and “artistic” under the statute. The definitions clearly contain different

components, and if the IWC had intended for an “artistic” profession also to

qualify as “learned,” it presumably would not have defined the professions’

“intellectual” requirements in different terms. See, e.g., Russello, 464 U.S. at 23

(“We refrain from concluding here that the differing language in the two

subsections has the same meaning in each.”). That presumption is particularly

strong given that the definitions of “learned” and “artistic” professions include

some common elements.16 If one profession could satisfy both classifications, the

common elements would be surplusage, but surplusage is to be avoided “unless

remote.’”) (quoting Board of Port Comm’rs v. Williams, 70 P.2d 918, 922 (Cal.
1937)). Here, the qualifying words in (b)(iii) apply to the “artistic” provision in
(b)(ii), but not to the “learned” provision in (b)(i).
16
For example, the “learned” professions are defined as not involving “the
performance of routine mental, manual, or physical processes,” and the “artistic”
professions do not involve “routine mental, manual, mechanical, or physical
work.”

28
absolutely necessary.” People v. Arias, 195 P.3d 103, 109 (Cal. 2008); see also

National Ass’n of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 669

(2007).

In sum, the text and structure of the Professional Exemption’s first

requirement indicate that the IWC targeted three different, mutually exclusive

categories of professions in the Wage Order. “Accountants” are mentioned by

name in the first category and therefore are exempt, if at all, only if they possess a

“license[] or certifi[cate]” to practice public accountancy.17 PwC concedes (at 2-3)

that Attest Associates do not meet that requirement.

2. The drafting history confirms that the professional

classifications are mutually exclusive

The drafting history of the Professional Exemption’s first requirement

confirms that the “enumerated,” “learned,” and “artistic” professions are mutually

exclusive—and that unlicensed accountants are categorically not exempt. Over the

last twenty years, the IWC has repeatedly extended the Labor Code’s overtime

protections to unlicensed accountants, and it has considered—and specifically

rejected—proposals that would extend the “learned” professions exemption to

17
The District Court held that Attest Associates are engaged in the practice
of “accounting.” See ER17-18. PwC does not contest or appeal that holding, and
therefore, it is law of the case. See, e.g., United States v. Washington, 235 F.3d
438, 441 (9th Cir. 2000).

29
cover unlicensed accountants. Thus, accountants are exempt from California’s

overtime requirements if and only if they are licensed CPAs.

a. In the 1989 Wage Order, the IWC first recognized the “learned” and

“artistic” professions as distinct alternatives to the “enumerated” professions. The

IWC’s 1989 Order provided:

No person shall be considered to be employed in an administrative,

executive, or professional capacity unless one of the following
conditions prevails:

(1) The employee is engaged in work which is primarily intellectual,

managerial, or creative, and which requires exercise of discretion and
independent judgment … ; or

(2) The employee is licensed or certified by the State of California and

is engaged in the practice of one of the following recognized
professions: law, medicine, dentistry, pharmacy, optometry,
architecture, engineering, teaching, or accounting, or is engaged in an
occupation commonly recognized as a learned or artistic profession….

Wage Order 89-4 §1(A)(1)-(2). The 1989 Order did not define the “learned” or

“artistic” professions, but it “recognized” those professions as alternatives to the

nine “enumerated” professions, disjoined by the word “or.” See White, 646 P.2d at

193 (finding use of “or” in statute established separate categories and noting that

surplusage in statutes should be avoided).

In drafting the 1989 Wage Order, the IWC reviewed and rejected a proposal

from the accounting industry to make accountants eligible for exemption under

both the “enumerated” and the “learned or artistic” provisions. The California

30
Society of Certified Public Accountants (“CalCPA”)—with PwC’s support18—

recommended that the IWC amend the Wage Order to state that the “learned or

artistic” professions “includ[e], but [are] not limited to,” the enumerated

professions. RJN, Ex. A, Presentation at 10. CalCPA emphasized that such an

amendment was necessary because, “[u]nder the present language in the [Wage]

Orders, only those accountants who have become Certified Public Accountants are

deemed exempt professionals.” Id. at 5-6. The IWC rejected CalCPA’s

proposal,19 thus ensuring that CPAs are the only accountants who satisfy the

Professional Exemption.20

In its “Statement as to Basis” for the 1989 Order, the IWC removed any

doubt that the “learned” and “artistic” professions do not overlap with the
18
See Plaintiffs-Appellees’ Request for Judicial Notice (filed Jan. 29, 2010)
(“RJN”), Ex. A, Attach. 1 (testimony of PwC Director). In its most-recent “Top
50” list, CalCPA “salute[d]” PwC for having 569 members of the society—the
second-largest total for any firm in California. See http://www.calcpa.org/Content/
Files/California%20CPA%20magazine/0709.top.50.firms.pdf.
19
CalCPA also suggested that, even without its proposal, unlicensed
accountants may qualify as “learned” professionals under federal regulations
promulgated pursuant to the Fair Labor Standards Act (“FLSA”). See RJN, Ex. A,
Presentation at 2, 5, 9 (citing 29 C.F.R. §§541.302(e)(1), (f) (1988)). The IWC
subsequently rejected that argument, too. See infra pp. 35-36 (explaining that the
IWC specifically considered and rejected the standards cited by CalCPA after they
were recodified in §541.301(e)(1), (f) (2000)).
20
PwC’s amici nevertheless assert that it would “overturn decades of pay
practices” in the accounting industry to make only CPAs eligible for exemption.
CELC Br. 1; see also Employers Group Br. 9, 23. That assertion, however,
ignores CalCPA’s own recognition—contemporaneously expressed—that the
Wage Order precludes that result.

31
“enumerated” professions. The IWC emphasized that the “‘learned or artistic’

profession” clause was intended to recognize “new group[s] as professionals”—

specifically, those in “[e]merging occupations, such as those in the fields of

science and high technology,” which are not already mentioned as enumerated

professions. RJN, Ex. B at 3. And in its interpretive guidelines for the 1989 Wage

Order, the IWC further confirmed that the “learned” and “artistic” provisions were

not intended to exempt unlicensed accountants in particular:

The IWC has explicitly extended the protections of its [overtime]

standards to … uncertified accountants. These are among the many
classifications of professional employees which often are improperly
treated as exempt from overtime requirements.

RJN, Ex. C at 21.21

b. The current Wage Order, promulgated in 2001, was the first in which

the IWC defined what it meant by “learned” and “artistic” professions. The IWC

made clear that those definitions are “intended to be construed in accordance with

[certain specified federal regulations] as they existed as of the date of this wage
21
The Division of Labor Standards Enforcement (“DLSE”), which is the
state agency responsible for “administer[ing] and enforc[ing]” California’s labor
laws, including IWC wage orders, Cal. Lab. Code §61, has confirmed that an
accountant is exempt from California’s overtime protections only if the person is a
licensed CPA. See RJN, Ex. D at 1 (“[A] person who is a graduate of a college or
university in the field of accountancy, but has not completed the CPA examination
process, is covered by the IWC Orders. However, the certified public accountant
who may be doing similar work is not covered.”). Some of the DLSE’s opinion
letters contain contrary dicta, see Dkt. No. 275, at 11, but, in any event, the IWC’s
pronouncements control over the DLSE’s, see, e.g., California Sch. of Culinary
Arts v. Lujan, 4 Cal. Rptr. 3d 785, 794-95 (Cal. Ct. App. 2003).

32
order.” Wage Order §1(A)(3)(e). The federal regulations that the IWC chose to

include—and exclude—further establish the IWC’s intent to make accountants

categorically ineligible for the “learned” or “artistic” provisions.

The DLSE’s “Policies and Interpretations Manual” includes all of the federal

regulations that the IWC reviewed for purposes of the 2001 Wage Order, and it

shows (in strikeout text) those that the IWC specifically chose to delete, thus

providing a guide to precisely what the IWC intended with respect to the

regulations it considered.22 See SER125-55. This Court must not read the Wage

Order to be consistent with the language the IWC rejected. See, e.g., Pacific Gas,

461 U.S. at 220 (It is “improper for us to give a reading to the Act that Congress

considered and rejected.”); INS v. Cardoza-Fonseca, 480 U.S. 421, 442-43 (1987)

(“Few principles of statutory construction are more compelling than the

proposition that Congress does not intend sub silentio to enact statutory language

that it has earlier discarded in favor of other language.”) (internal quotation marks

omitted).

22
As the District Court noted, see ER8-9, it is unclear whether the DLSE
promulgated its 2002 Manual in compliance with the California Administrative
Procedure Act. Nonetheless, the Manual provides clear evidence of the IWC’s
intent in striking specific federal regulations while drafting the 2001 Wage Order.

33
 First, the IWC deleted the regulation found at 29 C.F.R. §541.301(e)(1)

(2000),23 which provided that, “[g]enerally speaking,” “accounting” is a “learned

profession” under the FLSA. Given that specific rejection (see SER142-43), it

would be “improper” for this Court to conclude that “accounting” is a “learned

profession” under the Wage Order. See, e.g., Pacific Gas, 461 U.S. at 220.

Second, the IWC chose not to incorporate 29 C.F.R. §541.301(f) (2000),

which provided that unlicensed accountants may satisfy (in appropriate

circumstances) the federal “learned profession” provision. That federal regulation

provided as follows:

Many accountants are exempt as professional employees (regardless

of whether they are employed by public accounting firms or by other
types of enterprises). (Some accountants may qualify for exemption
as bona fide administrative employees.) However, exemption of
accountants … must be determined on the basis of the individual
employee’s duties and the other criteria in the regulations….
[A]ccountants who are not certified public accountants may also be
exempt as professional employees if they actually perform work which
requires the consistent exercise of discretion and judgment and
otherwise meet the tests prescribed in the definition of “professional”
employee.

SER143 (strikeouts omitted; emphasis added). Because the IWC deliberately

struck out language making unlicensed accountants eligible for the “learned”

professional exemption, the IWC further evinced an intent to make unlicensed

23
In drafting the 2001 Wage Order, the IWC considered (and either included
or rejected) federal regulations “as they existed as of the date of this order,” Wage
Order §1(A)(3)(e); see also Wage Order §1(A)(2)(f). Thus, the relevant federal
regulations are those found in the 2000 edition of the Code of Federal Regulations.

34
accountants ineligible for the “learned” professional exemption. To hold otherwise

would improperly presume that the IWC “intend[ed] sub silentio to enact statutory

language that it … earlier discarded in favor of other language.” Cardoza-

Fonseca, 480 U.S. at 442-43.

In contrast to the provisions it deleted, the IWC specifically chose to retain a

federal regulation supporting overtime pay for unlicensed accountants. That

regulation stated: “It has been the [Department of Labor’s] experience that some

employers erroneously believe that anyone employed in the field of accountancy

… will qualify for exemption as a professional employee by virtue of such

employment.” 29 C.F.R. §541.308(a) (2000). That inclusion—coupled with the

deletions of specific federal regulations—decisively establishes the IWC’s concern

that employers too often use the “accountant” label to avoid their obligation to pay

overtime.24

c. In sum, the Wage Order’s drafting history confirms the text’s plain

meaning: Accountants are exempt from the Wage Order, if at all, only if they

comply with subsection (a)’s “license[] or certifi[cate]” requirement. Unlicensed

24
Tellingly, PwC ignores former 29 C.F.R. §541.301(e), (f), and the quoted
portion of §541.308(a)—notwithstanding its repeated criticisms of the District
Court. See Br. 28 (the District Court “expressly chose to ignore” relevant federal
regulations), 29 (“the District Court gave no weight to the incorporated federal
authorities”), 30 (criticizing the District Court’s “rejection of the express mandate”
to consider relevant federal regulations).

35
accountants, like the Attest Associates, therefore are categorically excluded from

the Professional Exemption and remain entitled to overtime compensation.

B. Even If The Professional Classifications Are Not Mutually

Exclusive, Attest Associates Are Not Exempt Under The Learned
Profession Exemption

PwC cannot invoke the “learned” profession exemption to overtime pay. To

satisfy that exemption, PwC must prove that Attest Associates are “primarily

engaged” in exempt work. See Wage Order §1(A)(3)(b); id. §2(N) (defining

“primarily” as “more than one-half the employee’s work time”). The IWC

intended its “‘primarily’” engaged requirement to “afford[] employees greater

protections” than the FLSA would otherwise provide. RJN, Ex. B at 1; see also

RJN, Ex. E at 2-3.25 Here, however, PwC failed to provide any evidence of the

work that Attest Associates “primarily” perform—let alone did PwC prove that

Associates “primarily” perform exempt work.26 Indeed, Plaintiffs-Appellees

25
See also Ramirez, 978 P.2d at 8 (“The IWC’s wage orders, although at
times patterned after federal regulations, also sometimes provide greater protection
than is provided under federal law in the [FLSA] and accompanying federal
regulations.”); supra pp. 34-36. Therefore, notwithstanding PwC’s contrary
arguments (at 29-30), it is irrelevant whether unlicensed accountants may qualify
as exempt under FLSA.
26
PwC proffered a lone declaration (from Michael Moomaw), which did not
quantify or otherwise establish whether Attest Associates spend the majority of
their time performing exempt work. See SER111 (concluding that Associates
“regularly” use discretion and independent judgment). Moreover, the Moomaw
declaration is an unreliable and self-serving expert report, which purported to
survey how class members “actually spend[] [their] time,” Ramirez, 978 P.2d at
13—without surveying the class members themselves. See SER110. Under

36
submitted unrebutted evidence that, “[b]y far, the majority of [an Attest

Associate’s] time [i]s spent on actual audit engagements,” and “upwards of ninety

percent (90%)” of an Associate’s audit-engagement time is “spent sitting at [a]

computer,” SER102, going through highly routinized and nondiscretionary Steps—

such as “ticking and tying,” SER93. And by PwC’s own estimate, most of the

balance of an Associate’s time (5-10%, according to one former Associate

proffered by PwC) is spent “performing tasks such as photocopying, data entry,

organizing files, faxing documents, word processing, stuffing envelopes, [and]

picking up lunch or dinner for the team.” ER192; see also ER237 (estimating that

10-15% of a junior Associate’s time is spent on such menial tasks). That evidence

conclusively rebuts PwC’s Professional Exemption claim.

Moreover, even under PwC’s view that the “learned” profession exemption

could apply here, PwC still must prove that Attest Associates’ work “requir[es]

knowledge of an advanced type in a field or science or learning customarily

acquired by a prolonged course of specialized intellectual instruction and study, as

distinguished from … from an apprenticeship.” Wage Order §1(A)(3)(b)(i)

California law, such self-serving assertions do not preclude summary judgment.

See Golden Eagle Refinery Co. v. Associated Int’l Ins. Co., 102 Cal. Rptr. 2d 834,
845 (Cal. Ct. App. 2001) (“An expert opinion is worth no more than the reasons
upon which it rests. An opinion unsupported by reasons or explanations does not
establish the absence of a material fact issue for trial, as required for summary
judgment.”) (internal quotation marks omitted).

37
(emphasis added). PwC also must prove that its Attest Associates possess post-

baccalaureate or graduate-level degrees under the DLSE’s longstanding

interpretation of the “learned” profession exemption. See RJN, Ex. N at 4-5; see

also RJN, Exs. X-AA. Before the District Court, however, PwC conceded that

Attest Associates are “apprentice[s],” SER3,27 who possess only college-level

educations, see SER113. Thus, even under PwC’s view of the “learned”

profession exemption, Attest Associates are entitled to overtime pay.

C. Any Ambiguity Must Be Resolved In Attest Associates’ Favor

Although the text, structure, and drafting history of the Professional

Exemption clearly exclude Attest Associates, any ambiguity in the Wage Order

must be resolved in Plaintiffs-Appellees’ favor under two controlling principles of

California law.

First, the Wage Order’s overtime protections must be construed broadly.

The California Supreme Court’s “past decisions … teach that in light of the

remedial nature of the legislative enactments authorizing the regulation of wages,

hours and working conditions for the protection and benefit of employees, the

statutory provisions are to be liberally construed with an eye to promoting such

protection…. They are not construed within narrow limits of the letter of the law,

27
PwC’s concession follows from the fact that California law requires all
unlicensed accountants to complete an apprenticeship prior to becoming a CPA.
See Cal. Bus. & Prof. Code §5083 (2009); id. § 5093.

38
but rather are to be given liberal effect to promote the general object sought to be

accomplished.”28 IWC v. Superior Court, 613 P.2d 579, 585 (Cal. 1980); see also

Sav-On Drug Stores, Inc. v. Superior Court, 96 P.3d 194, 209 (Cal. 2004)

(“California’s overtime laws are remedial and are to be construed so as to promote

employee protection.”); Murphy v. Kenneth Cole Prods., Inc., 155 P.3d 284, 289

(Cal. 2007) (“We have … recognized that statutes governing conditions of

employment are to be construed broadly in favor of protecting employees.”);

accord Earley v. Superior Court, 95 Cal. Rptr. 2d 57, 63 (Cal. Ct. App. 2000).

Second, exemptions from the Wage Order’s overtime protections must be

construed narrowly. See, e.g., Sav-On Drug Stores, 96 P.3d at 210; Ramirez, 978

P.2d at 8 (“[U]nder California law, exemptions from statutory mandatory overtime

provisions are narrowly construed.”); Nordquist, 38 Cal. Rptr. 2d at 226

(“Exemptions [from overtime requirements for ‘professional’ and ‘administrative’

employees] are narrowly construed against the employer….”). Both the

“professional” and “administrative” exemptions are to be “limited to those

employees plainly and unmistakably within their terms.” Nordquist, 38 Cal. Rptr.

2d at 226. Moreover, PwC has the burden to prove that Attest Associates are

28
The Legislature has repeatedly emphasized that its “general object” is to
protect employees. See, e.g., 1999 Cal. Stat. 134, §2(g) (“[T]he Legislature
affirms the importance of the eight-hour workday, declares that it should be
protected, and reaffirms the state’s unwavering commitment to upholding the
eight-hour workday as a fundamental protection for working people.”).

39
“plainly and unmistakably” exempt from overtime under the Wage Order, because

“the assertion of an exemption from the overtime laws is considered to be an

affirmative defense, and therefore the employer bears the burden of proving the

employee’s exemption.” Ramirez, 978 P.2d at 8; see also Nordquist, 38 Cal. Rptr.

2d at 225-26.

PwC cannot meet that burden. In PwC’s view, all of its unlicensed

accountants are eligible for exemption from California’s wage and hour laws.

PwC further argues that those exemptions are satisfied by the junior-most, least-

experienced, and most heavily supervised full-time employees in its Attest

Division. If PwC is correct that its Attest Associates are exempt, then it follows a

fortiori that all accountants are exempt from overtime, which would render the

Wage Order’s coverage provision illusory. See Wage Order §§1, 2(O) (making

California’s wage-and-hour protections applicable to “accountants”). That result

would violate well-established canons of interpretation, including the general

prohibition against reading an exception to swallow an entire rule. See, e.g., Leslie

v. Commissioner, 146 F.3d 643, 649 (9th Cir. 1998); 2A Singer §46.06, at 187-90

(“[O]ne section will not destroy another unless the provision is the result of

obvious mistake or error.”). And it would turn the California Labor Code—with

its broad protections and narrow exemptions—on its head.

40
II. THE ADMINISTRATIVE EXEMPTION DOES NOT APPLY TO
ATTEST ASSOCIATES

PwC also argues that it need not pay overtime to Attest Associates because

unlicensed accountants satisfy the Wage Order’s “Administrative Exemption.” See

§1(A)(2). That argument lacks merit.

Like the Professional Exemption, the Administrative Exemption is narrow.

To satisfy the latter, an employer must prove five specific requirements:

 First, the employee must perform duties “directly related to management

policies or general business operations of [PwC or PwC’s clients]” (under

subsection (a));

 Second, the employee must “customarily and regularly exercise

discretion and independent judgment” (under subsection (b));

 Third, the employee must work under “specialized or technical lines”

under “only general supervision” (under subsection (d));

 Fourth, the employee must be “primarily engaged in duties that meet the

test of the exemption” (under subsection (f)); and

 Fifth, the employee must earn a particular minimum salary (under

subsection (g)).29

29
Several of the Administrative Exemption’s requirements are not at issue
here. PwC’s appeal does not address the Exemption’s second requirement
(“discretion and independent judgment” under subsection (b)). Even if it did,

41
PwC has the burden of proof that Attest Associates satisfy each requirement, and

its claim of Administration Exemption must be rejected if any requirement is not

met. See Eicher v. Advanced Bus. Integrators, Inc., 61 Cal. Rptr. 3d 114, 118 (Cal.

Ct. App. 2007) (“Stated in the conjunctive, each of the five elements must be

satisfied to find the employee exempt as an administrative employee.”).

PwC focuses its entire argument on the Administrative Exemption’s third

requirement—that Attest Associates operate “under only general supervision”—

but its arguments fail (both on the merits and because of waiver). Moreover, any

ambiguity in the Wage Order or its application to Attest Associates must be

construed against PwC. Accordingly, the District Court’s decision should be

affirmed.

PwC’s argument would fail because the record evidence demonstrates that Attest
Associates have little or no discretion or latitude. See supra pp. 4-16.
In addition, PwC conceded below that Attest Associates do not satisfy the
requirements of subsection (c). See ER38. PwC’s brief before this Court mentions
subsection (e) only in passing, see Br. 37-39, but PwC did not invoke subsection
(e) before the District Court, see ER106 (relying exclusively on subsection (d)),
and therefore its reliance on the former is not properly presented. See also
Aramark Facility Servs. v. SEIU, Local 1877, 530 F.3d 817, 824 n.2 (9th Cir.
2008) (stating that arguments made in passing and inadequately briefed are
waived); PwC Br. 17 (appearing to recognize that it raised only subsection (d)
below). In any event, PwC’s claim under subsection (e) fails because PwC has
never proved that Associates “execute[] under only general supervision special
assignments and tasks.” The salary requirement in subsection (g) is not contested
here.

42
 A. PwC Failed To Prove That Attest Associates Satisfy The Third
Requirement Of The Administrative Exemption

PwC claims that Attest Associates satisfy the Administrative Exemption’s

third requirement, but that argument fails on the merits. To satisfy that

exemption’s third requirement, PwC must prove that Attest Associates “perform[]

under only general supervision” work “requiring special training, experience, or

knowledge”—yet PwC concedes that its own evidence shows that up to 30% of the

Attest Associates do not have any sort of accounting degree, much less a

professional accountancy license or certification. In any event, PwC’s claim is

waived as not properly presented below.

1. PwC’s arguments fail on the merits

PwC cannot satisfy the Administrative Exemption’s third requirement

because Attest Associates do not “work along specialized or technical lines” or

“under only general supervision.” Indeed, under California law, Associates must

operate under exacting scrutiny and supervision. The Administrative Exemption

therefore does not apply.

The District Court found that PwC supervised “all the predicate steps and

processes involved in [Attest Associates’] work, ER39, and therefore concluded

that “no class members are ‘primarily engaged in duties that meet the test of the

exemption,’ as California courts have interpreted the term,” ER35; see also supra

pp. 4-16. Accordingly, PwC adduced no “triable question as to whether class

43
members are subject to only general supervision in performing the steps of the

audit.” ER40.

a. Under California law, the work performed by Attest Associates does

not satisfy the Administrative Exemption’s third requirement. In Herrera v. F.H.

Paschen/S.N. Nielsen, Inc., No. D051369, 2008 WL 5207359 (Cal. Ct. App. Dec.

15, 2008), the court held that a general contractor failed to prove that its project

managers—who coordinated $3 million worth of repairs for the County of San

Diego—“perform[ed] under only general supervision work along specialized or

technical lines requiring special training, experience, or knowledge.” Id. at *5

(internal quotation marks omitted). The employees in that case “would visit the

job site and consult with County employees in an effort to fully understand the

scope of the work”; they “would consult with subcontractors regarding supplies

needed to complete the work”; they “used a computer software program to develop

a line-item [project] proposal” for the client; and they “produced project schedules,

coordinated with subcontractors, acted as liaisons with the County, coordinated

material procurement and delivery, produced cost reports, documented changes

that could affect project completion or budgets, and communicated with senior

management concerning the status of projects.” Id. at *1-*2. Notwithstanding the

specialized knowledge needed to develop multimillion-dollar construction

proposals and the assignment of a single project manager to a given work site, the

44
court nevertheless held that the employees did not “perform[] under only general

supervision work along specialized or technical lines requiring special training,

experience, or knowledge.” Id. at *6. That conclusion applies to Attest

Associates, whose jobs involve much less “specialized or technical” work, who do

not interact in any regular capacity with PwC’s clients, and who labor under much

more pervasive (and, indeed, mandatory) “supervision.”

Similarly, the IWC has made clear that “perform[ance] under only general

supervision [of] work along specialized or technical lines” means work akin to that

of “advisory specialists to the management.” See 29 C.F.R. §§541.2,

541.201(a)(2)(i) (2000) (incorporated by Wage Order §1(A)(2)(f)); see also RJN,

Ex. E at 5. The federal regulations, adopted by reference in the Wage Order, note

that “[t]ypical examples of such advisory specialists are tax experts, insurance

experts, sales research experts, wage-rate analysts, investment consultants, foreign

exchange consultants, and statisticians.” 29 C.F.R. §541.201(a)(2)(i) (2000).30

Although that list of “advisory specialists” is merely illustrative, the regulation

should be read to “‘embrace only objects similar in nature to those objects

enumerated by the preceding specific words.’” Circuit City Stores, Inc. v. Adams,

30
PwC rightly concedes (at 39-40) that it cannot exempt unlicensed
accountants simply by giving them fancy-sounding job titles, such as “audit
consultant.” PwC wrongly criticizes the District Court, however, for comparing
the routine work performed by Attest Associates with the “expert” work connoted
by the distinct professionals listed above.

45
532 U.S. 105, 115 (2001) (quoting 2A Singer §47.17 (5th ed. 1991)); cf. Beecham

v. United States, 511 U.S. 368, 371 (1994) (“That several items in a list share an

attribute counsels in favor of interpreting the other items as possessing that

attribute as well.”). The record lacks proof that Attest Associates—the very lowest

and least-experienced members on a PwC engagement team—provide anything

like “expert” advice or “consultan[cy]” services to PwC’s clients. To the contrary,

PwC’s junior-most Associates rarely talk to PwC’s clients; and when they do, it is

only to receive information, not to convey advice. See SER16; SER18; SER25-26;

SER32; SER34. Indeed, any information generated by Associates is deposited into

PwC’s Client File, which PwC does not share with its clients. See SER65-70;

SER103. Therefore, PwC cannot persuasively claim that its Associates resemble

“experts” who provide advice to clients.31

b. To the extent the Administrative Exemption’s third requirement is

ambiguous, it should be interpreted in pari materia with other references to

“supervision” and “accountants” in the California Code. Notwithstanding PwC’s

suggestion (at 44 n.14) to the contrary, it is well-established that “the interpretation

31
Nor can PwC claim that Associates are exempt because they provide
CPAs with information that CPAs use to opine upon financial statements. The
DLSE has rejected that assertion in a related context. See RJN, Ex. P at 13 (“The
transmittal of information as to which others will exercise discretion and
independent judgment as to the course of action to be followed indicates the
absence of discretion essential to the administrative exemption.”).

46
of a doubtful statute may be influenced by language of other statutes which are not

specifically related, but which apply to similar persons, things, or relationships.”

2B Singer §53.03. See also Erlenbaugh v. United States, 409 U.S. 239, 243 (1972)

(under the in pari materia canon of statutory construction, statutes addressing the

same subject matter generally should be read “as if they were one law”) (internal

quotation marks omitted).

As relevant here, California’s Business and Professions Code allows the

practice of “accounting” under only two circumstances. First, a CPA may

“[h]old[] himself or herself out to the public … as one skilled in the knowledge,

science, and practice of accounting.” Cal. Bus. & Prof. Code §5051(a). Second,

an unlicensed accountant may work “as an employee of, or an assistant to,” a CPA,

but only under the CPA’s “control and supervision.” Id. §5053. The legislature’s

decision to couple together the terms “control and supervision” implies its

intention to require CPAs to exercise pervasive authority over the actions of their

unlicensed employees. See, e.g., Gustafson v. Alloyd Co., 513 U.S. 561, 575

(1995) (“a word is known by the company it keeps”); Random House Unabridged

Dictionary 442 (2d ed. 1993) (defining “control” as “the act or power of …

regulation; domination or command”). Because the Business and Professions

Code requires PwC to exercise “control and supervision” over Attest Associates

and prohibits PwC from “hold[ing] … out in any manner” Associates as employees

47
“skilled in the knowledge … of accounting” (Cal. Bus. & Prof. Code §§5051(a),

5053), Associates do not “perform[] under only general supervision work …

requiring special … knowledge,” Wage Order §1(A)(2)(d).

Moreover, it bears emphasis that the California Legislature used present-

tense, active verbs in §5053 to describe the supervision that CPAs must exercise

over Attest Associates. See §5053 (An unlicensed Associate is not prohibited from

“serving as an employee of, or an assistant to, a certified public accountant … if

the employee or assistant works under the control and supervision of a certified

public accountant … and if the employee or assistant does not issue any statement

over his or her name.”) (emphases added). If PwC is correct (at 38) that such

“present-tense, active verbs” connote a legislative intention to require that

Associates are “closely … supervised while they work,” then §5053 requires PwC

to exercise constant and contemporaneous supervision over its unlicensed

Associates. PwC’s argument to the contrary would create tension—if not outright

contradiction—between the Code and the Wage Order, and therefore it must be

rejected. See United Sav. Ass’n, 484 U.S. at 371.

48
 The record suggests that PwC, in fact, complies with §§5051 and 5053.32

For example, PwC’s proprietary software virtually eliminates Associates’

discretion. According to one former Associate:

As an example of the work I performed on an audit: within the

accounts receivable section of the audit, a [MyClient] step might tell
me that I needed to select and obtain a sample of thirty invoices from
a particular department of a client’s business. The step would then
tell me to compare those invoices with certain client reports to verify
that the amounts and other relevant information matched. If the
invoices matched, I would document that within the MyClient file and
“check off” that step, moving to the next. However, if an invoice
didn’t match, or I found something unexpected, this would be
considered an “exception.” The detailed steps specifically told me
how to handle exceptions. For instance, the step might state that if I
found three or more exceptions within my sample of thirty, I was to
get another sample of thirty and test that new sample. If the new
sample contained the same error rate, the step might then instruct me
to report my finding to my superior. If I was ever unsure of what to
do, or if I found something in my audit that the audit step didn’t
specifically account for, I was trained by PwC to immediately seek
guidance from my superiors. I did not have the authority to omit, add
or alter any audit steps.

SER102-03. And PwC’s internal policies further prescribe the work that Attest

Associates can do.33 For example, one of PwC’s “[g]uiding principle[s]”

32
PwC would be guilty of a misdemeanor if it failed to supervise its Attest
Associates in accordance with §§5051 and 5053. See Cal. Bus. & Prof. Code
§5120.
33
California law squarely rejects PwC’s claim (at 41) that its internal
policies are irrelevant to the questions presented. See, e.g., Bell v. Farmers Ins.
Exch., 105 Cal. Rptr. 2d 59, 75 (Cal. Ct. App. 2001) (relying on employer’s
internal manual to support conclusion that plaintiffs did not satisfy Administrative
Exemption).

49
emphasizes that matters of “significant judgment” must be raised for “engagement

leader clearance” and cannot be decided or resolved by an Associate alone.

SER77; see also SER31 (“Our policies are an integral part of the quality control

and risk management processes in our various lines of service.”).

c. The arguments pressed by PwC and its amici suggesting that Attest

Associates can operate only under “general supervision” not only conflict with

professional standards imposed by California and PwC itself,34 but also are

surprising given recent scandals caused by the allegedly lax auditing standards and

oversight practices employed by accounting firms.

Facing public outrage and skeptical members of Congress, PwC has

repeatedly emphasized the “major change[s]” it implemented to overhaul its audit

procedures, including “the addition of required procedures” to detect fraud and a

“requirement to perform certain specific audit procedures to test for the intentional

override of internal controls by management.” RJN, Ex. BB at 828.

Before the District Court, however, PwC unsuccessfully argued that the

Administrative Exemption should apply to Attest Associates because “work

directly related to [its] management policies or general business operations,” Wage

Order §1(A)(2)(a)(i), is being performed by recent college graduates—only some

34
See, e.g., Cal. Bus. & Prof. Code §5051(d) (only a CPA may “prepare[] or
certif[y]” an audit report); SER31-32; SER34.

50
of whom have accounting degrees, and all of whom lack significant real-world

experience—under what PwC referred to as only “minimum supervision” by

accounting professionals. SER117. Facing this Court, PwC and its amici argue

again that “the actual work responsibilities” of Attest Associates differ in material

ways from those articulated in PwC’s internal quality-control procedures, as well

as the professionalism standards set forth by the American Institute of Certified

Public Accountants (“AICPA”). PwC Br. 41; see also AICPA Br. 6-8. But if

PwC’s junior-most and least-qualified unlicensed accountants receive only

“minimum supervision,” then PwC’s other employees are even freer to do as they

please. See PwC Br. 43 (quoting an AICPA standard for the proposition that

“‘[t]he extent of supervision appropriate in a given instance depends on many

factors, including … the qualifications of persons performing the work’”) (first

alteration in original). Those assertions are inconsistent with the evidence and

reflect bad policy.

2. PwC’s arguments are waived

In any event, the Administrative Exemption’s third requirement is not

properly before this Court because PwC waived its arguments below. As the

District Court found, PwC’s summary judgment papers failed to recognize that the

“general supervision” prong of the Administrative Exemption is a distinct element,

which requires proof separate from the other elements of PwC’s claim. See ER39-

51
40; see also SER121-22 (arguing that plaintiffs are subject “[t]o [o]nly [g]eneral

[s]upervision” by relying on facts and law relevant only to whether plaintiffs

exercise “discretion and independent judgment”). Therefore, PwC’s claim is

waived. See, e.g., United States v. Beckstead, 500 F.3d 1154, 1164-65 (10th Cir.

2007); People ex rel. Dep’t of Alcoholic Beverage Control v. Miller Brewing Co.,

128 Cal. Rptr. 2d 861, 868 (Cal. Ct. App. 2002) (“[A]ppellant must present a

factual analysis and legal authority on each point made or the argument may be

deemed waived.”).

Indeed, PwC now concedes that it failed to ask “the District Court to define

the [‘general supervision’] requirement,” Br. 38, notwithstanding that PwC had the

burden to prove that Attest Associates satisfy it. Given PwC’s failure to present its

claim properly below, however, it cannot now claim error in the District Court’s

handling of it. See Hourani v. United States, 239 F. App’x 195, 197-98 (6th Cir.

2007) (Where appellant failed to present his argument properly, “[appellant]

cannot salvage his claim by laying the blame for any error at the doorstep of the

district court for allegedly failing to understand the claim that [appellant] made.”);

cf. Wainwright v. Sykes, 433 U.S. 72, 89 (1977) (prohibiting “‘sandbagging’ on the

part of defense lawyers”).

Moreover, under the Administrative Exemption’s third requirement, PwC

must prove that Attest Associates “perform[] under only general supervision work

52
along specialized or technical lines requiring special training, experience, or

knowledge.” Wage Order §1(A)(2)(d). Thus, the Wage Order requires both that

an employee “performs under only general supervision” and that he or she

“work[s] along specialized or technical lines requiring special training, experience,

or knowledge.” Here, however, PwC offered no evidence before the District Court

that Associates satisfy the latter half of that requirement. Indeed, PwC conceded

below that Attest Associates’ work does not “requir[e]” any particular amount of

“special … knowledge.” Id.; see SER113-14 (conceding evidence that only about

1,400 of the 2,000 class members have any sort of accounting degree).35

35
Even if this Court concludes that PwC satisfied the third requirement of
the Administrative Exemption, it should nevertheless affirm because PwC has
offered insufficient evidence that Attest Associates satisfy that Exemption’s first
and fourth requirements. The first and fourth requirements of the Administrative
Exemption force PwC to prove that its employees are “primarily engaged” in work
that is “directly related to management policies or general business operations of
[PwC’s clients].” See also Wage Order §2(N) (defining “primarily” as “more than
one-half the employee’s work time”). Before the court below, however, PwC
failed to support that Attest Associates are “primarily engaged” in such work.
Indeed, PwC’s summary judgment papers referenced the “primarily engaged”
requirement only in its “Statement of Facts,” see ER91-94, and even there, PwC
offered no legal argument or proof that Associates spend the majority of their time
performing exempt work. The District Court also held that “there is no evidence
that any class member actually spends their time in this way,” ER42, and PwC
does not contest that holding on appeal. Therefore, summary judgment in favor of
Plaintiffs-Appellees was appropriate. See supra pp. 36-37.

53
 B. Any Ambiguity Must Be Resolved In Attest Associates’ Favor

Finally, it bears emphasis that Attest Associates are entitled to overtime

compensation unless PwC can prove that they fall “plainly and unmistakably

within the[] terms” of the Administrative Exemption. Nordquist, 38 Cal. Rptr. 2d

at 226; see also supra pp. 38-40. If this Court should deem the foregoing

arguments somehow as close—and they are not—Attest Associates are

presumptively included within the overtime protections provided by law.

III. THE RULES GOVERNING PROFESSIONS OTHER THAN

ACCOUNTING DO NOT HELP PWC

Perhaps recognizing that no exemption from overtime “plainly and

unmistakably” applies to unlicensed accountants, PwC attempts to rely on the rules

that govern professions other than accounting. Those arguments also are

unavailing.

A. The Rules Governing Teachers Do Not Help PwC

As discussed above, workers in the “enumerated” professions—such as

medicine, law, and accounting—are exempt if and only if they are “licensed or

certificated” by the State of California. Teaching is one of the “enumerated”

professions, but unlike the others, “teaching” is further defined in the Wage Order.

Under Wage Order §2(R), “[t]eaching” is defined in relevant part to mean “the

profession of teaching under a certificate from the Commission for Teacher

Preparation and Licensing [‘CTPL’].” PwC asserts that the IWC would have had

54
no reason to include a specific license requirement for “teaching” if all unlicensed

teachers were categorically excluded from the Professional Exemption. But PwC’s

inference is off-base.

In fact, the IWC’s decision not to include a similar definition of

“accounting” further confirms its intention to protect unlicensed accountants. If

the IWC had defined “accounting” as “the profession of accountancy under a

certificate from the California Board of Accountancy (‘CBA’),” then Attest

Associates—who are unlicensed by the CBA—would be excluded from the

“enumerated” profession of accounting (and hence eligible for categorization in the

“learned” or “artistic” professions). The IWC’s decision not to limit the profession

of “accounting” in this way underscores its intention to exempt accountants, if at

all, only if they are “licensed or certificated” by the CBA.

Moreover, §2(R) simply recognizes California’s valid certificating authority

(the CTPL) and clarifies that teachers cannot rely on certificates from other

authorities. The IWC’s decision to single out the CTPL accords with the unique

regulatory history of the teaching profession in California. See Sidney A. Inglis,

California Develops the Ryan Reforms, available at http://www.ctc.ca.gov/

commission/history/1966-1970-Ryan-Reforms.pdf (describing CTPL’s creation as

legislative effort to alleviate confusion over teacher licensing); see also RJN, Ex. H

(§2(R) was intended to protect some but not all “teachers”).

55
 B. The Rules Governing Lawyers, Engineers, And Other
Enumerated Professions Do Not Help PwC

In their manufactured parade of horribles, PwC and its amici argue that

affirmance here will have disastrous effects for California businesses, particularly

those that employ lawyers, engineers, and other enumerated professionals who are

licensed to practice in other States. Those arguments, however, are both

overblown and irrelevant.

First, PwC overstates its argument because most—if not all—of the

professionals in PwC’s parade may satisfy the Professional Exemption through

their out-of-state licenses. For example, the California Rules of Court allow an

attorney “licensed to practice law” in another State to practice temporarily in

California, in connection with both litigation and counseling. See Cal. Rules of

Court 9.47(b), 9.48(b). The State Bar of California has created a

“Multijurisdictional Practice Program” that registers and licenses out-of-state

attorneys to practice in California for various purposes, including serving as in-

house counsel. See State Bar of California, Multijurisdictional Practice (MJP)

Program, http://calbar.ca.gov/state/calbar/ calbar_generic.jsp?cid=12441; Cal.

Rule of Court 9.46. And out-of-state attorneys, who are licensed by a bar other

than California’s, also may apply for temporary authorization to appear pro hac

56
vice. See Cal. Rule of Court 9.40.36 Likewise, the state legislature has created

procedures allowing CPAs and professional engineers to use their out-of-state

licenses to practice in California. See Cal. Bus. & Prof. Code §§5054(a) (CPAs),

5096 (same), 6759 (engineers). A result that such procedures would allow those

professionals to practice as if they were “licensed or certificated” by the State of

California under the Professional Exemption would not be jeopardized by

affirmance here.

Second, the rules governing professions other than accounting are irrelevant.

The IWC specifically targeted unlicensed accountants by crossing out not one but

two federal regulations that would have exempted them as “learned” professionals.

See supra pp. 34-35. The Wage Order’s text and drafting history also illustrate

that the IWC gave particularized attention to other professions, including teaching,

nursing, and computer software workers. See supra pp. 54-56 (teachers); RJN, Ex.

E at 3-4 (nurses); Wage Order §1(A)(3)(h) (computer software). Given the

evidence that the IWC crafted profession-specific rules and exceptions, PwC’s

effort to draw inferences between professions is especially unpersuasive.

36
The District Court’s apparent concern over whether its law clerks are
covered by the Professional Exemption, see ER15 n.4, is misplaced. Federal law
clerks are governed by the FLSA, not the California Labor Code.

57
 CONCLUSION

The District Court's judgment should be affirmed.

Respectfully submitted,

~C.~~,~4-
WILLIAM A. KERSHAW DAVID C. FREDERICK
LYLEW. COOK SILVIJA A. STRIKIS
STUART C. TALLEY KELLOGG, HUBER, HANSEN, TODD,
KERSHAW, CUTTER & RATINOFF, LLP EVANS & FIGEL, P.L.L.C.
401 Watt A venue 1615 M Street, N.W., Suite 400
Sacramento, California 95864 Washington, DC 20036
(916) 448-9800 (202) 326-7900

Counsel for Appellees Jason Campbell and Sarah Sobek, et al.

January 29, 2010

58
 CERTIFICATE OF COMPLIANCE

In accordance with Federal Rule of Appellate Procedure 32(a)(7)(C),

I certify that this brief complies with the applicable type-volume limitations.

Exclusive of the portions exempted by Federal Rule of Appellate Procedure

32(a)(7)(B)(iii), this brief contains 13,700 words. This certificate was prepared in

reliance on the word-count function of the word-processing system (Microsoft

Word 2007) used to prepare this brief.

~(-' Gn:-~ :*-

David C. Frederick
 

STATUTORY
ADDENDUM

 
 

Table of Contents

Page
State:

Cal. Code Regs., tit. 8, § 11040 (eff. Jan. 1, 2001 as amended)

(Wage Order 2001-4) (excerpt) ........................................................ Add. 1

Cal. Code Regs., tit. 8, § 11040 (eff. Jan. 1, 1989)

(Wage Order 89-4) (excerpt) ............................................................ Add. 10

California Assembly Bill AB 60, 1999 Cal. Stat. 134 (excerpt) ................ Add. 13

Cal. Bus. & Prof. Code § 5051(a), (c), (d)* ................................................ Add. 14

Cal. Bus. & Prof. Code § 5053 ................................................................... Add. 15

Cal. Bus. & Prof. Code § 5054(a) ............................................................... Add. 15

Cal. Bus. & Prof. Code § 5093 ................................................................... Add. 16

Cal. Bus. & Prof. Code § 5096 ................................................................... Add. 17

Cal. Bus. & Prof. Code § 5097 ................................................................... Add. 20

Cal. Bus. & Prof. Code § 5120 ................................................................... Add. 21

Cal. Bus. & Prof. Code § 6759 ................................................................... Add. 22

Cal. Bus & Prof. Code § 5083 (2009)......................................................... Add. 23

Cal. Lab. Code § 61 .................................................................................... Add. 24

Cal. Lab. Code § 510(a) .............................................................................. Add. 24

Cal. Lab. Code § 515(a) .............................................................................. Add. 25

                                                            
*
Unless otherwise indicated, California Code sections reproduced herein are the
current version of the Code.
 
 

Cal. Rule of Court 9.40 ............................................................................... Add. 25

Cal. Rule of Court 9.46 ............................................................................... Add. 29

Cal. Rule of Court 9.47(b) .......................................................................... Add. 34

Cal. Rule of Court 9.48(b) .......................................................................... Add. 35

Federal:

29 C.F.R. § 541.201(a) (2000) .................................................................... Add. 36

29 C.F.R. § 541.301 (2000) ........................................................................ Add. 37

29 C.F.R. § 541.302 (c)(1) (2000) .............................................................. Add. 40

29 C.F.R. § 541.308(a) (2000) .................................................................... Add. 41

29 C.F.R. § 541.302 (e)(1), (f) (1988) ........................................................ Add. 42

ii
 
 Title 8, California Code of Regulations, Section 11040
(eff. Jan. 1, 2001 as amended) (excerpt)

§ 11040. Order Regulating Wages, Hours, and Working Conditions in

Professional, Technical, Clerical, Mechanical, and Similar Occupations.

1. Applicability of Order. This order shall apply to all persons employed in

professional, technical, clerical, mechanical, and similar occupations whether paid
on a time, piece rate, commission, or other basis, except that:

(A) Provisions of sections 3 through 12 shall not apply to persons employed in

administrative, executive, or professional capacities. The following requirements
shall apply in determining whether an employee’s duties meet the test to qualify
for an exemption from those sections:

(1) Executive Exemption. A person employed in an executive capacity

means any employee:

(a) Whose duties and responsibilities involve the management of the

enterprise in which he/she is employed or of a customarily recognized
department or subdivision thereof; and

(b) Who customarily and regularly directs the work of two or more other
employees therein; and

(c) Who has the authority to hire or fire other employees or whose
suggestions and recommendations as to the hiring or firing and as to the
advancement and promotion or any other change of status of other
employees will be given particular weight; and

(d) Who customarily and regularly exercises discretion and independent

judgment; and

(e) Who is primarily engaged in duties which meet the test of the
exemption. The activities constituting exempt work and non-exempt work
shall be construed in the same manner as such items are construed in the
following regulations under the Fair Labor Standards Act effective as of the
date of this order: 29 C.F.R. Sections 541.102, 541.104-111, and 541.115-
16. Exempt work shall include, for example, all work that is directly and
closely related to exempt work and work which is properly viewed as a

Add. 1 
 means for carrying out exempt functions. The work actually performed by
the employee during the course of the workweek must, first and foremost, be
examined and the amount of time the employee spends on such work,
together with the employer’s realistic expectations and the realistic
requirements of the job, shall be considered in determining whether the
employee satisfies this requirement.

(f) Such an employee must also earn a monthly salary equivalent to no

less than two (2) times the state minimum wage for full-time employment.
Full-time employment is defined in Labor Code Section 515(c) as 40 hours
per week.

(2) Administrative Exemption. A person employed in an administrative

capacity means any employee:

(a) Whose duties and responsibilities involve either:

(i) The performance of office or non-manual work directly related to

management policies or general business operations of his/her employer
or his employer’s customers; or

(ii) The performance of functions in the administration of a school

system, or educational establishment or institution, or of a department or
subdivision thereof, in work directly related to the academic instruction
or training carried on therein; and

(b) Who customarily and regularly exercises discretion and independent

judgment; and

(c) Who regularly and directly assists a proprietor, or an employee

employed in a bona fide executive or administrative capacity (as such terms
are defined for purposes of this section); or

(d) Who performs under only general supervision work along specialized
or technical lines requiring special training, experience, or knowledge; or

(e) Who executes under only general supervision special assignments and
tasks; and

(f) Who is primarily engaged in duties that meet the test of the
exemption. The activities constituting exempt work and non-exempt work

Add. 2 
 shall be construed in the same manner as such terms are construed in the
following regulations under the Fair Labor Standards Act effective as of the
date of this order: 29 C.F.R. Sections 541.201-205, 541.207-208, 541.210,
and 541.215. Exempt work shall include, for example, all work that is
directly and closely related to exempt work and work which is properly
viewed as a means for carrying out exempt functions. The work actually
performed by the employee during the course of the workweek must, first
and foremost, be examined and the amount of time the employee spends on
such work, together with the employer’s realistic expectations and the
realistic requirements of the job, shall be considered in determining whether
the employee satisfies this requirement.

(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. Full-
time employment is defined in California Labor Code Section 515(c) as 40
hours per week.

(3) Professional Exemption. A person employed in a professional capacity

means any employee who meets all of the following requirements:

(a) Who is licensed or certified by the State of California and is primarily

engaged in the practice of one of the following recognized professions: law,
medicine, dentistry, optometry, architecture, engineering, teaching, or
accounting; or

(b) Who is primarily engaged in an occupation commonly recognized as

a learned or artistic profession. For the purposes of this subsection, “learned
or artistic profession” means an employee who is primarily engaged in the
performance of:

(i) Work requiring knowledge of an advanced type in a field or

science or learning customarily acquired by a prolonged course of
specialized intellectual instruction and study, as distinguished from a
general academic education and from an apprenticeship, and from
training in the performance of routine mental, manual, or physical
processes, or work that is an essential part of or necessarily incident to
any of the above work; or

(ii) Work that is original and creative in character in a recognized field

of artistic endeavor (as opposed to work which can be produced by a
person endowed with general manual or intellectual ability and training),
Add. 3 
 and the result of which depends primarily on the invention, imagination,
or talent of the employee or work that is an essential part of or
necessarily incident to any of the above work; and

(iii) Whose work is predominantly intellectual and varied in character

(as opposed to routine mental, manual, mechanical, or physical work)
and is of such character that the output produced or the result
accomplished cannot be standardized in relation to a given period of
time.

(c) Who customarily and regularly exercises discretion and independent

judgment in the performance of duties set forth in subparagraphs (a) and (b).

(d) Who earns a monthly salary equivalent to no less than two (2) times
the state minimum wage for full-time employment. Full-time employment is
defined in Labor Code Section 515(c) as 40 hours per week.

(e) Subparagraph (b) above is intended to be construed in accordance

with the following provisions of federal law as they existed as of the date of
this wage order: 29 C.F.R. Sections 541.207, 541.301(a)-(d), 541.302,
541.306, 541.307, 541.308, and 541.310.

(f) Notwithstanding the provisions of this subparagraph, pharmacists

employed to engage in the practice of pharmacy, and registered nurses
employed to engage in the practice of nursing, shall not be considered
exempt professional employees, nor shall they be considered exempt from
coverage for the purposes of this subparagraph unless they individually meet
the criteria established for exemption as executive or administrative
employees.

(g) Subparagraph (f) above shall not apply to the following advanced
practice nurses:

(i) Certified nurse midwives who are primarily engaged in performing

duties for which certification is required pursuant to Article 2.5
(commencing with Section 2746) of Chapter 6 of Division 2 of the
Business and Professions Code.

(ii) Certified nurse anesthetists who are primarily engaged in

performing duties for which certification is required pursuant to Article 7

Add. 4 
 (commencing with Section 2825) of Chapter 6 of Division 2 of the
Business and Professions Code.

(iii) Certified nurse practitioners who are primarily engaged in

performing duties for which certification is required pursuant to Article 8
(commencing with Section 2834) of Chapter 6 of Division 2 of the
Business and Professions Code.

(iv) Nothing in this subparagraph shall exempt the occupations set

forth in clauses (i), (ii), and (iii) from meeting the requirements of
subsection 1(A)(3)(a)-(d) above.

(h) Except, as provided in subparagraph (i), an employee in the computer

software field who is paid on an hourly basis shall be exempt, if all of the
following apply:

(i) The employee is primarily engaged in work that is intellectual or

creative and that requires the exercise of discretion and independent
judgment.

(ii) The employee is primarily engaged in duties that consist of one or

more of the following:

—The application of systems analysis techniques and procedures,

including consulting with users, to determine hardware, software, or
system functional specifications.

—The design, development, documentation, analysis, creation,

testing, or modification of computer systems or programs, including
prototypes, based on and related to user or system design
specifications.

—The documentation, testing, creation, or modification of computer

programs related to the design of software or hardware for computer
operating systems.

(iii) The employee is highly skilled and is proficient in the theoretical

and practical application of highly specialized information to computer
systems analysis, programming, and software engineering. A job title
shall not be determinative of the applicability of this exemption.

Add. 5 
 (iv) The employee’s hourly rate of pay is not less than forty-two
dollars and sixty four cents ($42.64). The Division of Labor Statistics
and Research shall adjust this pay rate on October 1 of each year to be
effective on January 1 of the following year by an amount equal to the
percentage increase in the California Consumer Price Index for Urban
Wage Earners and Clerical Workers.

(i) The exemption provided in subparagraph (h) does not apply to an

employee if any of the following apply:

(i) The employee is a trainee or employee in an entry-level position

who is learning to become proficient in the theoretical and practical
application of highly specialized information to computer systems
analysis, programming, and software engineering.

(ii) The employee is in a computer-related occupation but has not

attained the level of skill and expertise necessary to work independently
and without close supervision.

(iii) The employee is engaged in the operation of computers or in the

manufacture, repair, or maintenance of computer hardware and related
equipment.

(iv) The employee is an engineer, drafter, machinist, or other

professional whose work is highly dependent upon or facilitated by the
use of computers and computer software programs and who is skilled in
computer-aided design software, including CAD/CAM, but who is not in
a computer systems analysis or programming occupation.

(v) The employee is a writer engaged in writing material, including

box labels, product descriptions, documentation, promotional material,
setup and installation instructions, and other similar written information,
either for print or for on screen media or who writes or provides content
material intended to be read by customers, subscribers, or visitors to
computer-related media such as the World Wide Web or CD-ROMs.

(vi) The employee is engaged in any of the activities set forth in

subparagraph (h) for the purpose of creating imagery for effects used in
the motion picture, television, or theatrical industry.

Add. 6 
 (B) Except as provided in Sections 1, 2, 4, 10, and 20, the provisions of this
order shall not apply to any employees directly employed by the State or any
political subdivision thereof, including any city, county, or special district.

(C) The provisions of this order shall not apply to outside salespersons.

(D) The provisions of this order shall not apply to any individual who is the
parent, spouse, child, or legally adopted child of the employer.

(E) The provisions of this order shall not apply to any individual participating in
a national service program, such as AmeriCorps, carried out using assistance
provided under Section 12571 of Title 42 of the United States Code. (See Stats.
2000, ch. 365, amending Labor Code Section 1171.)

2. Definitions.

(A) An “alternative workweek schedule” means any regularly scheduled

workweek requiring an employee to work more than eight (8) hours in a 24-hour
period.

(B) “Commission” means the Industrial Welfare Commission of the State of

California.

(C) “Division” means the Division of Labor Standards Enforcement of the State
of California.

(D) “Emergency” means an unpredictable or unavoidable occurrence at

unscheduled intervals requiring immediate action.

(E) “Employ” means to engage, suffer, or permit to work.

(F) “Employee” means any person employed by an employer.

(G) “Employees in the health care industry” means any of the following:

(1) Employees in the health care industry providing patient care; or

(2) Employees in the health care industry working in a clinical or medical

department, including pharmacists dispensing prescriptions in any practice
setting; or

Add. 7 
 (3) Employees in the health care industry working primarily or regularly as a
member of a patient care delivery team; or

(4) Licensed veterinarians, registered veterinary technicians and unregistered

animal health technicians providing patient care.

(H) “Employer” means any person as defined in Section 18 of the Labor Code,
who directly or indirectly, or through an agent or any other person, employs or
exercises control over the wages, hours, or working conditions of any person.

(I) “Health care emergency” consists of an unpredictable or unavoidable

occurrence at unscheduled intervals relating to healthcare delivery, requiring
immediate action.

(J) “Health care industry” is defined as hospitals, skilled nursing facilities,

intermediate care and residential care facilities, convalescent care institutions,
home health agencies, clinics operating 24 hours per day, and clinics performing
surgery, urgent care, radiology, anesthesiology, pathology, neurology or dialysis.

(K) “Hours worked” means the time during which an employee is subject to the
control of an employer, and includes all the time the employee is suffered or
permitted to work, whether or not required to do so. Within the health care
industry, the term “hours worked” means the time during which an employee is
suffered or permitted to work for the employer, whether or not required to do so, as
interpreted in accordance with the provisions of the Fair Labor Standards Act

(L) “Minor” means, for the purpose of this order, any person under the age of
18 years.

(M) “Outside salesperson” means any person, 18 years of age or over, who
customarily and regularly works more than half the working time away from the
employer’s place of business selling tangible or intangible items or obtaining
orders or contracts for products, services or use of facilities.

(N) “Primarily” as used in Section 1, Applicability, means more than one-half

the employee’s work time.

(O) “Professional, Technical, Clerical, Mechanical, and Similar Occupations”

includes professional, semiprofessional, managerial, supervisorial, laboratory,
research, technical, clerical, office work, and mechanical occupations. Said
occupations shall include, but not be limited to, the following: accountants;

Add. 8 
agents; appraisers; artists; attendants; audio-visual technicians; bookkeepers;
bundlers; billposters; canvassers; carriers; cashiers; checkers; clerks; collectors;
communications and sound technicians; compilers; copy holders; copy readers;
copy writers; computer programmers and operators; demonstrators and display
representatives; dispatchers; distributors; door-keepers; drafters; elevator
operators; estimators; editors; graphic arts technicians; guards; guides; hosts;
inspectors; installers; instructors; interviewers; investigators; librarians; laboratory
workers; machine operators; mechanics; mailers; messengers; medical and dental
technicians and technologists; models; nurses; packagers; photographers; porters
and cleaners; process servers; printers; proof readers; salespersons and sales
agents; secretaries; sign erectors; sign painters; social workers; solicitors;
statisticians; stenographers; teachers; telephone, radio-telephone, telegraph and
call-out operators; tellers; ticket agents; tracers; typists; vehicle operators; x-ray
technicians; their assistants and other related occupations listed as professional,
semiprofessional, technical, clerical, mechanical, and kindred occupations.

(P) “Shift” means designated hours of work by an employee, with a designated

beginning time and quitting time.

(Q) “Split shift” means a work schedule, which is interrupted by non-paid non-
working periods established by the employer, other than bona fide rest or meal
periods.

(R) “Teaching” means, for the purpose of Section 1 of this order, the profession
of teaching under a certificate from the Commission for Teacher Preparation and
Licensing or teaching in an accredited college or university.

(S) “Wages” includes all amounts for labor performed by employees of every
description, whether the amount is fixed or ascertained by the standard of time,
task, piece, commission basis, or other method of calculation.

(T) “Workday” and “day” mean any consecutive 24-hour period beginning at
the same time each calendar day.

(U) “Workweek” and “week” mean any seven (7) consecutive days, starting
with the same calendar day each week. “Workweek” is a fixed and regularly
recurring period of 168 hours, seven (7) consecutive 24-hour periods.

* * * * *

Add. 9 
 Title 8, California Code of Regulations, Section 11040
(eff. Jan. 1, 1989) (excerpt)

Article 4. Professional, Technical, Clerical, Mechanical, and Similar Occupations

(Order No. 4-89, Effective July 1, 1989)

11040. Order Regulating Wages, Hours, and Working Conditions in

Professional, Technical, Clerical, Mechanical, and Similar Occupations.

1. Applicability of Order. This Order shall apply to all persons employed in

professional, technical, clerical, mechanical, and similar occupations whether paid
on a time, piece rate, commission, or other basis, unless such occupation is
performed in an industry covered by an industry order of this Commission, except
that:

(A) Provisions of Sections 3 through 12 shall not apply to persons employed in

administrative, executive, or professional capacities. No person shall be
considered to be employed in an administrative, executive, or professional capacity
unless one of the following conditions prevails:

(1) The employee is engaged in work which is primarily intellectual,

managerial, or creative, and which requires exercise of discretion and
independent judgment, and for which the remuneration is net less than $1150.00
per month; or

(2) The employee is licensed or certified by the State of California and is

engaged in the practice of one of the following recognized professions: law,
medicine, dentistry, pharmacy, optometry, architecture, engineering, teaching,
or accounting, or is engaged in an occupation commonly recognized as a
learned or artistic profession; provided, however, that registered nurses shall not
be considered to be exempt professional employees for the purposes of this
subsection (2) of this order, unless they individually meet the administrative,
executive, or professional criteria described in subsection (A) (1) above.

(B) The provisions of this Order shall not apply to employees directly employed
by the State or any county, incorporated city or town or other municipal
corporation, or to outside salespersons.

(C) Provisions of this Order shall not apply to any individual who is the parent,
spouse, child, or legally adopted child of the employer.

Add. 10 
 2. Definitions.

(A) “Commission” means the Industrial Welfare Commission of the State of

California.

(B) “Division” means the Division of Labor Standards Enforcement of the State
of California.

(C) “Professional, Technical, Clerical, Mechanical, and Similar Occupations”

includes professional, semiprofessional, managerial, supervisorial, laboratory,
research, technical, clerical, office work, and mechanical occupations. Said
occupations shall include, but not be limited to the following: accountants, agents,
appraisers, artists; attendants; audio-visual technicians; bookkeepers, bundlers;
billposters; canvassers; carriers; cashiers; checkers; clerks; collectors;
communications and sound technicians; compilers; copy holders; copy readers;
copy writers; computer programmers and operators; demonstrators and display
representatives; dispatchers; distributors; door-keepers; drafters; elevator
operators; estimators; editors; graphic arts technicians; guards; guides; hosts;
inspectors; installers; instructors; interviewers; investigators; librarians; laboratory
workers; machine operators; mechanics; mailers; messengers; medical and dental
technicians and technologists; models; nurses; packagers; photographers; porters
and cleaners; process servers; printers; proof readers; salespersons and sales
agents; secretaries; sign erectors; sign painters; social workers; solicitors;
statisticians; stenographers; teachers; telephone, radio-telephone, telegraph and
call-out operators; tellers; ticket agents; tracers; typists; vehicle operators; x-ray
technicians; their assistants and other related occupations listed as professional,
semiprofessional, technical, clerical, mechanical, and kindred occupations.

(D) “Emergency” means an unpredictable or unavoidable occurrence at

unscheduled intervals requiring immediate action.

(E) “Employ” means to engage, suffer, or permit to work.

(F) “Employee” means any person employed by an employer.

(G) “Employer” means any person as defined in Section 18 of the Labor Code,
who directly or indirectly, or through an agent or any other person, employs or
exercises control over the wages, hours, or working conditions of any person.

Add. 11 
 (H) “Hours worked” means the time during which an employee is subject to the
control of an employer, and includes all the time the employee is suffered or
permitted to work, whether or not required to do so.

(I) “Minor” means, for the purpose of this Order, any person under the age of
eighteen (18) years.

(J) “Outside Salesperson” means any person, 18 years of age or over, who
customarily and regularly works more than half the working time away from the
employer’s place of business selling tangible or intangible items or obtaining
orders or contracts for products, services or use of facilities.

(K) “Primarily” as used in Section 1, Applicability, means more than one-half

the employee’s work time.

(L) “Split shift” means a work schedule which is interrupted by non-paid non-
working periods established by the employer, other than bona fide rest or meal
periods.

(M) “Teaching” means, for the purpose of Section 1 of this Order, the
profession of teaching under a certificate from the Commission for Teacher
Preparation and Licensing or teaching in an accredited college or university.

(N) “Wages” (See California Labor Code, Section 200)

(O) “Workday” means any consecutive 24 hours beginning at the same time
each calendar day.

(P) “Workweek” means any seven (7) consecutive days, starting with the same
calendar day each week. “Workweek” is a fixed and regularly recurring period of
168 hours, seven (7) consecutive 24-hour periods.

* * * * *

Add. 12 
 California Assembly Bill AB 60, 1999 Cal. Stat. 134 (excerpt)

The people of the State of California do enact as follows:

SECTION 1. This act shall be known and may be cited as the “Eight-Hour-Day
Restoration and Workplace Flexibility Act of 1999.”

SEC. 2. The Legislature hereby finds and declares all of the following:

(a) The eight-hour workday is the mainstay of protection for California’s

working people, and has been for over 80 years.

(b) In 1911, California enacted the first daily overtime law setting the eight-
hour daily standard, long before the federal government enacted overtime
protections for workers.

(c) Ending daily overtime would result in a substantial pay cut for California
workers who currently receive daily overtime.

(d) Numerous studies have linked long work hours to increased rates of
accident and injury.

(e) Family life suffers when either or both parents are kept away from home for
an extended period of time on a daily basis.

(f) In 1998 the Industrial Welfare Commission issued wage orders that deleted
the requirement to pay premium wages after eight hours of work a day in five wage
orders regulating eight million workers.

(g) Therefore, the Legislature affirms the importance of the eight-hour

workday, declares that it should be protected, and reaffirms the state’s unwavering
commitment to upholding the eight-hour workday as a fundamental protection for
working people.

* * * * *

Add. 13 
 California Business and Professions Code (2010) (excerpts)

§ 5051. Practice of public accountancy

Except as provided in Sections 5052 and 5053, a person shall be deemed to be

engaged in the practice of public accountancy within the meaning and intent of this
chapter if he or she does any of the following:

(a) Holds himself or herself out to the public in any manner as one skilled in the
knowledge, science, and practice of accounting, and as qualified and ready to
render professional service therein as a public accountant for compensation.

* * * * *

(c) Offers to prospective clients to perform for compensation, or who does

perform on behalf of clients for compensation, professional services that involve or
require an audit, examination, verification, investigation, certification,
presentation, or review of financial transactions and accounting records.

(d) Prepares or certifies for clients reports on audits or examinations of books or

records of account, balance sheets, and other financial, accounting and related
schedules, exhibits, statements, or reports that are to be used for publication, for
the purpose of obtaining credit, for filing with a court of law or with any
governmental agency, or for any other purpose.

* * * * *

Add. 14 
§ 5053. Employees and assistants; conditions; attorneys

Nothing contained in this chapter precludes a person who is not a certified public
accountant or public accountant from serving as an employee of, or an assistant to,
a certified public accountant or public accountant or partnership or a corporation
composed of certified public accountants or public accountants holding a permit to
practice pursuant to this chapter if the employee or assistant works under the
control and supervision of a certified public accountant, or a public accountant
authorized to practice public accountancy pursuant to this chapter and if the
employee or assistant does not issue any statement over his or her name.

This section does not apply to an attorney at law in connection with his or her
practice of law.

§ 5054. Out-of-state practitioners

(a) Notwithstanding any other provision of this chapter, an individual or firm

holding a valid and current license, certificate, or permit to practice public
accountancy from another state may prepare tax returns for natural persons who
are California residents or estate tax returns for the estates of natural persons who
were clients at the time of death without obtaining a permit to practice public
accountancy issued by the board under this chapter or a practice privilege pursuant
to Article 5.1 (commencing with Section 5096) provided that the individual or firm
does not physically enter California to practice public accountancy pursuant to
Section 5051, does not solicit California clients, and does not assert or imply that
the individual or firm is licensed or registered to practice public accountancy in
California.

* * * * *

Add. 15 
§ 5093. Applicants for admission to the certified public accountant
examination; education, examination, and experience requirements;
regulations

(a) To qualify for the certified public accountant license, an applicant who is
applying under this section shall meet the education, examination, and experience
requirements specified in subdivisions (b), (c), and (d), or otherwise prescribed
pursuant to this article. The board may adopt regulations as necessary to implement
this section.

(b) (1) An applicant for admission to the certified public accountant

examination under the provisions of this section shall present satisfactory evidence
that the applicant has completed a baccalaureate or higher degree conferred by a
degree-granting university, college, or other institution of learning accredited by a
regional or national accrediting agency included in a list of these agencies
published by the United States Secretary of Education under the requirements of
the Higher Education Act of 1965 as amended (20 U.S.C. Sec. 1001, et seq.), or
meeting, at a minimum, the standards described in subdivision (c) of Section 5094.
The total educational program shall include a minimum of 24 semester units in
accounting subjects and 24 semester units in business related subjects. This
evidence shall be provided at the time of application for admission to the
examination, except that an applicant who applied, qualified, and sat for at least
two subjects of the examination for the certified public accountant license before
May 15, 2002, may provide this evidence at the time of application for licensure.

(2) An applicant for issuance of the certified public accountant license under
the provisions of this section shall present satisfactory evidence that the applicant
has completed at least 150 semester units of college education including a
baccalaureate or higher degree conferred by a college or university, meeting, at a
minimum, the standards described in Section 5094, the total educational program
to include the units described in subdivision (b) of Section 5094 and a minimum of
24 semester units in accounting subjects and 24 semester units in business related
subjects. This evidence shall be presented at the time of application for the
certified public accountant license. Nothing herein shall be deemed inconsistent
with Section 5094 or 5094.6.

(c) An applicant for the certified public accountant license shall pass an
examination prescribed by the board.

Add. 16 
 (d) The applicant shall show, to the satisfaction of the board, that the applicant
has had one year of qualifying experience. This experience may include providing
any type of service or advice involving the use of accounting, attest, compilation,
management advisory, financial advisory, tax or consulting skills. To be qualifying
under this section, experience shall have been performed in accordance with
applicable professional standards. Experience in public accounting shall be
completed under the supervision or in the employ of a person licensed or otherwise
having comparable authority under the laws of any state or country to engage in
the practice of public accountancy. Experience in private or governmental
accounting or auditing shall be completed under the supervision of an individual
licensed by a state to engage in the practice of public accountancy.

(e) Applicants completing education at a college or university located outside of

this state, meeting, at a minimum, the standards described in Section 5094, shall be
deemed to meet the educational requirements of this section if the board
determines that the education is substantially equivalent to the standards of
education specified under this chapter.

§ 5096. Public accountants licensed in another state whose principal place of

business is out-of-state allowed to practice in California without certificate or
license; conditions; substantially equivalent states; procedure; disqualifying
conditions

(a) An individual whose principal place of business is not in this state and who
has a valid and current license, certificate or permit to practice public accountancy
from another state may, subject to the conditions and limitations in this article,
engage in the practice of public accountancy in this state under a practice privilege
without obtaining a certificate or license under this chapter if the individual
satisfies one of the following:

(1) The individual has continually practiced public accountancy as a

certified public accountant under a valid license issued by any state for at least
four of the last ten years.

(2) The individual has a license, certificate, or permit from a state which has
been determined by the board to have education, examination, and experience
qualifications for licensure substantially equivalent to this state’s qualifications
under Section 5093.

Add. 17 
 (3) The individual possesses education, examination, and experience
qualifications for licensure which have been determined by the board to be
substantially equivalent to this state’s qualifications under Section 5093.

(b) The board may designate states as substantially equivalent under paragraph
(2) of subdivision (a) and may accept individual qualification evaluations or
appraisals conducted by designated entities, as satisfying the requirements of
paragraph (3) of subdivision (a).

(c) To obtain a practice privilege under this section, an individual who meets the
requirements of subdivision (a), shall do the following:

(1) In the manner prescribed by board regulation, notify the board of the
individual’s intent to practice.

(2) Pay a fee as provided in Article 8 (commencing with Section 5130).

(d) Except as otherwise provided by this article or by board regulation, the

practice privilege commences when the individual notifies the board, provided the
fee is received by the board within 30 days of that date. The board shall permit the
notification to be provided electronically.

(e) An individual who holds a practice privilege under this article:

(1) Is subject to the personal and subject matter jurisdiction and disciplinary
authority of the board and the courts of this state.

(2) Shall comply with the provisions of this chapter, board regulations, and
other laws, regulations, and professional standards applicable to the practice of
public accountancy by the licensees of this state and to any other laws and
regulations applicable to individuals practicing under practice privileges in this
state except the individual is deemed, solely for the purpose of this article, to
have met the continuing education requirements and ethics examination
requirements of this state when such individual has met the examination and
continuing education requirements of the state in which the individual holds the
valid license, certificate, or permit on which the substantial equivalency is
based.

(3) Shall not provide public accountancy services in this state from any
office located in this state, except as an employee of a firm registered in this

Add. 18 
 state. This paragraph does not apply to public accountancy services provided to
a client at the client’s place of business or residence.

(4) Is deemed to have appointed the regulatory agency of the state that
issued the individual’s certificate, license, or permit upon which substantial
equivalency is based as the individual’s agent on whom notices, subpoenas or
other process may be served in any action or proceeding by the board against
the individual.

(5) Shall cooperate with any board investigation or inquiry and shall timely
respond to a board investigation, inquiry, request, notice, demand or subpoena
for information or documents and timely provide to the board the identified
information and documents.

(f) A practice privilege expires one year from the date of the notice, unless a
shorter period is set by board regulation.

(g) (1) No individual may practice under a practice privilege without prior
approval of the board if the individual has, or acquires at any time during the term
of the practice privilege, any disqualifying condition under paragraph (2) of this
subdivision.

(2) Disqualifying conditions include:

(A) Conviction of any crime other than a minor traffic violation.

(B) Revocation, suspension, denial, surrender or other discipline or

sanctions involving any license, permit, registration, certificate or other
authority to practice any profession in this or any other state or foreign
country or to practice before any state, federal, or local court or agency, or
the Public Company Accounting Oversight Board.

(C) Pendency of any investigation, inquiry or proceeding by or before

any state, federal or local court or agency, including, but not limited to, the
Public Company Accounting Oversight Board, involving the professional
conduct of the individual.

(D) Any judgment or arbitration award against the individual involving

the professional conduct of the individual in the amount of thirty thousand
dollars ($30,000) or greater.

Add. 19 
 (E) Any other conditions as specified by the board in regulation.

(3) The board may adopt regulations exempting specified minor occurrences
of the conditions listed in subparagraph (B) of paragraph (2) from being
disqualifying conditions under this subdivision.

§ 5097. Records of practices and procedures; minimum requirements; review

standard; rebuttable presumption; document retention

(a) Audit documentation shall be a licensee’s records of the procedures applied,

the tests performed, the information obtained, and the pertinent conclusions
reached in an audit engagement. Audit documentation shall include, but is not
limited to, programs, analyses, memoranda, letters of confirmation and
representation, copies or abstracts of company documents, and schedules or
commentaries prepared or obtained by the licensee.

(b) Audit documentation shall contain sufficient documentation to enable a

reviewer with relevant knowledge and experience, having no previous connection
with the audit engagement, to understand the nature, timing, extent, and results of
the auditing or other procedures performed, evidence obtained, and conclusions
reached, and to determine the identity of the persons who performed and reviewed
the work.

(c) Failure of the audit documentation to document the procedures applied, tests
performed, evidence obtained, and relevant conclusions reached in an engagement
shall raise a presumption that the procedures were not applied, tests were not
performed, information was not obtained, and relevant conclusions were not
reached. This presumption shall be a rebuttable presumption affecting the burden
of proof relative to those portions of the audit that are not documented as required
in subdivision (b). The burden may be met by a preponderance of the evidence.

(d) Audit documentation shall be maintained by a licensee for the longer of the
following:

(1) The minimum period of retention provided in subdivision (e).

(2) A period sufficient to satisfy professional standards and to comply with

applicable laws and regulations.

Add. 20 
 (e) Audit documentation shall be maintained for a minimum of seven years which
shall be extended during the pendency of any board investigation, disciplinary
action, or legal action involving the licensee or the licensee’s firm. The board may
adopt regulations to establish a different retention period for specific categories of
audit documentation where the board finds that the nature of the documentation
warrants it.

(f) Licensees shall maintain a written documentation retention and destruction

policy that shall set forth the licensee’s practices and procedures complying with
this article.

§ 5120. Violations as misdemeanor; certification to local enforcement officer

Any person who violates Article 3 (commencing with Section 5050) is guilty of a
misdemeanor, punishable by imprisonment for not more than six months, or by a
fine of not more than one thousand dollars ($1,000), or both.

Whenever the board has reason to believe that any person is liable to punishment
under this article, the board or with its approval the administrative committee, may
certify the facts to the appropriate enforcement officer of the city or county where
the alleged violation had taken place and the officer may cause appropriate
proceedings to be brought.

Add. 21 
§ 6759. Applicants registered in other states or countries; second division
examinations

The board, upon application therefor, on its prescribed form, and the payment of
the application fee fixed by this chapter, may issue a certificate of registration as a
professional engineer, without written examination, to any person holding a
certificate of registration issued to him or her by any state or country when the
applicant’s qualifications meet the requirements of this chapter, and rules
established by the board. The board shall not require a comity applicant to meet
any requirement not required of California applicants. For purposes of this section,
equivalent second division examinations shall be eight-hour written examinations
prepared by or administered by a state or territory either by single or combined
branch at the level generally administered by the board to persons who passed or
were exempted from the first division examination. Applicants who have passed
an equivalent second division combined branch or a single branch examination in a
branch not recognized for registration in California shall be registered in the
branch in which their experience and education indicate the closest relationship.

Add. 22 
 California Business and Professions Code (2009) (excerpts)

§ 5083. Experience requirements; rules

(a) Pursuant to subdivision (b) of Section 5090, an individual applying for

licensure shall meet, to the satisfaction of the board, one of the following
requirements:

(1) Four years of experience if the applicant qualified to sit for the exam by
meeting the requirements of subdivision (b) or (c) of Section 5081.1.

(2) Three years of experience if the applicant qualified to sit for the exam by
meeting the requirements of subdivision (a) or (d) of Section 5081.1 or meets
the requirements of Section 5082.3.

(b) In order to be qualifying under this section, experience shall have been
performed in accordance with applicable professional standards. Experience in
public accounting may be qualifying if completed by, or in the employ of, a person
licensed or otherwise having comparable authority under the laws of any state or
country to engage in the practice of public accountancy. Experience in private or
governmental accounting or auditing employment may be qualifying provided that
this work was performed under the direct supervision of an individual licensed by a
state to engage in the practice of public accountancy.

(c) Qualifying experience for licensure includes providing any type of service or
advice involving the use of accounting, attest, compilation, management advisory,
financial advisory, tax, or consulting skills.

(d) The board shall prescribe rules related to the experience requirements set
forth in this section, including a requirement that each applicant demonstrate to the
board satisfactory experience in the attest function as it relates to financial
statements. For purposes of this subdivision, the attest function includes audit and
review of financial statements.

(e) This section shall remain in effect only until January 1, 2010, and as of that
date is repealed, unless a later enacted statute, that is enacted before January 1,
2010, deletes or extends that date.

Add. 23 
 California Labor Code (excerpts)

§ 61. Division of Labor Standards Enforcement; administrative duties

The provisions of Chapter 1 (commencing with Section 1171) of Part 4 of Division

2 shall be administered and enforced by the department through the Division of
Labor Standards Enforcement.

§ 510. Day’s work; overtime; commuting time

(a) Eight hours of labor constitutes a day’s work. Any work in excess of eight
hours in one workday and any work in excess of 40 hours in any one workweek
and the first eight hours worked on the seventh day of work in any one
workweek shall be compensated at the rate of no less than one and one-half
times the regular rate of pay for an employee. Any work in excess of 12 hours
in one day shall be compensated at the rate of no less than twice the regular rate
of pay for an employee. In addition, any work in excess of eight hours on any
seventh day of a workweek shall be compensated at the rate of no less than
twice the regular rate of pay of an employee. Nothing in this section requires
an employer to combine more than one rate of overtime compensation in order
to calculate the amount to be paid to an employee for any hour of overtime
work. The requirements of this section do not apply to the payment of overtime
compensation to an employee working pursuant to any of the following:

(1) An alternative workweek schedule adopted pursuant to Section 511.

(2) An alternative workweek schedule adopted pursuant to a collective

bargaining agreement pursuant to Section 514.

(3) An alternative workweek schedule to which this chapter is inapplicable

pursuant to Section 554.

* * * * *

Add. 24 
§ 515. Exemptions

(a) The Industrial Welfare Commission may establish exemptions from the
requirement that an overtime rate of compensation be paid pursuant to Sections
510 and 511 for executive, administrative, and professional employees,
provided that the employee is primarily engaged in the duties that meet the test
of the exemption, customarily and regularly exercises discretion and
independent judgment in performing those duties, and earns a monthly salary
equivalent to no less than two times the state minimum wage for full-time
employment. The commission shall conduct a review of the duties that meet
the test of the exemption. The commission may, based upon this review,
convene a public hearing to adopt or modify regulations at that hearing
pertaining to duties that meet the test of the exemption without convening wage
boards. Any hearing conducted pursuant to this subdivision shall be concluded
not later than July 1, 2000.

* * * * *

Add. 25 
 California Rules of Court (excerpts)

Rule 9.40. Counsel pro hac vice

(a) Eligibility

A person who is not a member of the State Bar of California but who is a
member in good standing of and eligible to practice before the bar of any
United States court or the highest court in any state, territory, or insular
possession of the United States, and who has been retained to appear in a
particular cause pending in a court of this state, may in the discretion of such
court be permitted upon written application to appear as counsel pro hac
vice, provided that an active member of the State Bar of California is
associated as attorney of record. No person is eligible to appear as counsel
pro hac vice under this rule if the person is:

(1) A resident of the State of California;

(2) Regularly employed in the State of California; or

(3) Regularly engaged in substantial business, professional, or other

activities in the State of California.

(b) Repeated appearances as a cause for denial

Absent special circumstances, repeated appearances by any person under

this rule is a cause for denial of an application.

(c) Application

(1) Application in superior court

A person desiring to appear as counsel pro hac vice in a superior court

must file with the court a verified application together with proof of
service by mail in accordance with Code of Civil Procedure section
1013a of a copy of the application and of the notice of hearing of the
application on all parties who have appeared in the cause and on the
State Bar of California at its San Francisco office. The notice of
hearing must be given at the time prescribed in Code of Civil

Add. 26 
 Procedure section 1005 unless the court has prescribed a shorter
period.

(2) Application in Supreme Court or Court of Appeal

An application to appear as counsel pro hac vice in the Supreme Court

or a Court of Appeal must be made as provided in rule 8.54, with
proof of service on all parties who have appeared in the cause and on
the State Bar of California at its San Francisco office.

(d) Contents of application

The application must state:

(1) The applicant’s residence and office address;

(2) The courts to which the applicant has been admitted to practice and
the dates of admission;

(3) That the applicant is a member in good standing in those courts;

(4) That the applicant is not currently suspended or disbarred in any

court;

(5) The title of court and cause in which the applicant has filed an
application to appear as counsel pro hac vice in this state in the
preceding two years, the date of each application, and whether or not
it was granted; and

(6) The name, address, and telephone number of the active member of the
State Bar of California who is attorney of record.

(e) Fee for application

An applicant for permission to appear as counsel pro hac vice under this rule
must pay a reasonable fee not exceeding $50 to the State Bar of California
with the copy of the application and the notice of hearing that is served on
the State Bar. The Board of Governors of the State Bar of California will fix
the amount of the fee:

Add. 27 
 (1) To defray the expenses of administering the provisions of this rule
that are applicable to the State Bar and the incidental consequences
resulting from such provisions; and

(2) Partially to defray the expenses of administering the Board’s other

responsibilities to enforce the provisions of the State Bar Act relating
to the competent delivery of legal services and the incidental
consequences resulting therefrom.

(f) Counsel pro hac vice subject to jurisdiction of courts and State Bar

A person permitted to appear as counsel pro hac vice under this rule is
subject to the jurisdiction of the courts of this state with respect to the law of
this state governing the conduct of attorneys to the same extent as a member
of the State Bar of California. The counsel pro hac vice must familiarize
himself or herself and comply with the standards of professional conduct
required of members of the State Bar of California and will be subject to the
disciplinary jurisdiction of the State Bar with respect to any of his or her acts
occurring in the course of such appearance. Article 5, chapter 4, division III
of the Business and Professions Code and the Rules of Procedure of the
State Bar govern in any investigation or proceeding conducted by the State
Bar under this rule.

(g) Supreme Court and Court of Appeal not precluded from permitting
argument in a particular case

This rule does not preclude the Supreme Court or a Court of Appeal from
permitting argument in a particular case from a person who is not a member
of the State Bar, but who is licensed to practice in another jurisdiction and
who possesses special expertise in the particular field affected by the
proceeding.

Add. 28 
Rule 9.46. Registered in-house counsel

(a) Definitions

The following definitions apply to terms used in this rule:

(1) “Qualifying institution” means a corporation, a partnership, an

association, or other legal entity, including its subsidiaries and
organizational affiliates. Neither a governmental entity nor an entity
that provides legal services to others can be a qualifying institution for
purposes of this rule. A qualifying institution must:

(A) Employ at least 10 employees full time in California; or

(B) Employ in California an attorney who is an active member in

good standing of the State Bar of California.

(2) “Active member in good standing of the bar of a United States state,
jurisdiction, possession, territory, or dependency” means an attorney
who meets all of the following criteria:

(A) Is a member in good standing of the entity governing the

practice of law in each jurisdiction in which the member is
licensed to practice law;

(B) Remains an active member in good standing of the entity

governing the practice of law in at least one United States state,
jurisdiction, possession, territory, or dependency, other than
California, while practicing law as registered in-house counsel
in California; and

(C) Has not been disbarred, has not resigned with charges pending,
or is not suspended from practicing law in any other
jurisdiction.

(b) Scope of practice

Subject to all applicable rules, regulations, and statutes, an attorney

practicing law under this rule is:

Add. 29 
 (1) Permitted to provide legal services in California only to the qualifying
institution that employs him or her;

(2) Not permitted to make court appearances in California state courts or

to engage in any other activities for which pro hac vice admission is
required if they are performed in California by an attorney who is not
a member of the State Bar of California; and

(3) Not permitted to provide personal or individual representation to any

customers, shareholders, owners, partners, officers, employees,
servants, or agents of the qualifying institution.

(c) Requirements

For an attorney to practice law under this rule, the attorney must:

(1) Be an active member in good standing of the bar of a United States

state, jurisdiction, possession, territory, or dependency;

(2) Register with the State Bar of California and file an Application for
Determination of Moral Character;

(3) Meet all of the requirements for admission to the State Bar of
California, except that the attorney:

(A) Need not take the California bar examination or the Multistate
Professional Responsibility Examination; and

(B) May practice law while awaiting the result of his or her
Application for Determination of Moral Character;

(4) Comply with the rules adopted by the Board of Governors relating to
the State Bar Registered In-House Counsel Program;

(5) Practice law exclusively for a single qualifying institution, except that,
while practicing under this rule, the attorney may, if so qualified,
simultaneously practice law as a registered legal services attorney;

(6) Abide by all of the laws and rules that govern members of the State
Bar of California, including the Minimum Continuing Legal
Education (MCLE) requirements;

Add. 30 
 (7) Satisfy in his or her first year of practice under this rule all of the
MCLE requirements, including ethics education, that members of the
State Bar of California must complete every three years and,
thereafter, satisfy the MCLE requirements applicable to all members
of the State Bar; and

(8) Reside in California.

(d) Application

To qualify to practice law as registered in-house counsel, an attorney must:

(1) Register as an attorney applicant and file an Application for

Determination of Moral Character with the Committee of Bar
Examiners;

(2) Submit to the State Bar of California a declaration signed by the

attorney agreeing that he or she will be subject to the disciplinary
authority of the Supreme Court of California and the State Bar of
California and attesting that he or she will not practice law in
California other than on behalf of the qualifying institution during the
time he or she is registered in-house counsel in California, except that
if so qualified, the attorney may, while practicing under this rule,
simultaneously practice law as a registered legal services attorney;
and

(3) Submit to the State Bar of California a declaration signed by an

officer, a director, or a general counsel of the applicant’s employer, on
behalf of the applicant’s employer, attesting that the applicant is
employed as an attorney for the employer, that the nature of the
employment conforms to the requirements of this rule, that the
employer will notify the State Bar of California within 30 days of the
cessation of the applicant’s employment in California, and that the
person signing the declaration believes, to the best of his or her
knowledge after reasonable inquiry, that the applicant qualifies for
registration under this rule and is an individual of good moral
character.

Add. 31 
(e) Duration of practice

A registered in-house counsel must renew his or her registration annually.

There is no limitation on the number of years in-house counsel may register
under this rule. Registered in-house counsel may practice law under this
rule only for as long as he or she remains employed by the same qualifying
institution that provided the declaration in support of his or her application.
If an attorney practicing law as registered in-house counsel leaves the
employment of his or her employer or changes employers, he or she must
notify the State Bar of California within 30 days. If an attorney wishes to
practice law under this rule for a new employer, he or she must first register
as in-house counsel for that employer.

(f) Eligibility

An application to register under this rule may not be denied because:

(1) The attorney applicant has practiced law in California as in-house

counsel before the effective date of this rule.

(2) The attorney applicant is practicing law as in-house counsel at or after

the effective date of this rule, provided that the attorney applies under
this rule within six months of its effective date.

(g) Application and registration fees

The State Bar of California may set appropriate application fees and initial
and annual registration fees to be paid by registered in-house counsel.

(h) State Bar Registered In-House Counsel Program

The State Bar must establish and administer a program for registering
California in-house counsel under rules adopted by the Board of Governors.

(i) Inherent power of Supreme Court

Nothing in this rule may be construed as affecting the power of the Supreme
Court of California to exercise its inherent jurisdiction over the practice of
law in California.

Add. 32 
(j) Effect of rule on multijurisdictional practice

Nothing in this rule limits the scope of activities permissible under existing
law by attorneys who are not members of the State Bar of California.

Add. 33 
Rule 9.47. Attorneys practicing law temporarily in California as part of
litigation

* * * * *

(b) Requirements

For an attorney to practice law under this rule, the attorney must:

(1) Maintain an office in a United States jurisdiction other than California

and in which the attorney is licensed to practice law;

(2) Already be retained by a client in the matter for which the attorney is
providing legal services in California, except that the attorney may
provide legal advice to a potential client, at the potential client’s
request, to assist the client in deciding whether to retain the attorney;

(3) Indicate on any Web site or other advertisement that is accessible in

California either that the attorney is not a member of the State Bar of
California or that the attorney is admitted to practice law only in the
states listed; and

(4) Be an active member in good standing of the bar of a United States

state, jurisdiction, possession, territory, or dependency.

* * * * *

Add. 34 
Rule 9.48. Nonlitigating attorneys temporarily in California to provide legal
services

* * * * *

(b) Requirements

For an attorney to practice law under this rule, the attorney must:

(1) Maintain an office in a United States jurisdiction other than California

and in which the attorney is licensed to practice law;

(2) Already be retained by a client in the matter for which the attorney is
providing legal services in California, except that the attorney may
provide legal advice to a potential client, at the potential client’s
request, to assist the client in deciding whether to retain the attorney;

(3) Indicate on any Web site or other advertisement that is accessible in

California either that the attorney is not a member of the State Bar of
California or that the attorney is admitted to practice law only in the
states listed; and

(4) Be an active member in good standing of the bar of a United States

state, jurisdiction, possession, territory, or dependency.

Add. 35 
 29 C.F.R. Pt. 541 (2000) (excerpts)

29 C.F.R. § 541.201 Types of administrative employees.

(a) Three types of employees are described in § 541.2(c) who, if they meet the
other tests in § 541.2, qualify for exemption as ‘‘administrative’’ employees.

(1) Executive and administrative assistants. The first type is the assistant to a
proprietor or to an executive or administrative employee. In modern industrial
practice there has been a steady and increasing use of persons who assist an
executive in the performance of his duties without themselves having executive
authority Typical titles of persons in this group are executive assistant to the
president, confidential assistant, executive secretary, assistant to the general
manager, administrative assistant and, in retail or service establishments, assistant
manager and assistant buyer. Generally speaking, such assistants are found in
large establishments where the official assisted has duties of such scope and which
require so much attention that the work of personal scrutiny, correspondence, and
interviews must be delegated.

(2) Staff employees. (i) Employees included in the second alternative in the
definition are those who can be described as staff rather than line employees, or as
functional rather than departmental heads. They include among others employees
who act as advisory specialists to the management. Typical examples of such
advisory specialists are tax experts, insurance experts, sales research experts,
wage-rate analysts, investment consultants, foreign exchange consultants, and
statisticians.

* * * * *

Add. 36 
29 C.F.R. § 541.301 Learned professions.

(a) The ‘‘learned’’ professions are described in § 541.3(a)(1) as those requiring

knowledge of an advanced type in a field of science or learning customarily
acquired by a prolonged course of specialized intellectual instruction and study as
distinguished from a general academic education and from an apprenticeship and
from training in the performance of routine mental, manual, or physical processes.

(b) The first element in the requirement is that the knowledge be of an advanced
type. Thus, generally speaking, it must be knowledge which cannot be attained at
the high school level.

(c) Second, it must be knowledge in a field of science or learning. This serves to

distinguish the professions from the mechanical arts where in some instances the
knowledge is of a fairly advanced type, but not in a field of science or learning.

(d) The requisite knowledge, in the third place, must be customarily acquired by
a prolonged course of specialized intellectual instruction and study. Here it should
be noted that the word ‘‘customarily’’ has been used to meet a specific problem
occurring in many industries. As is well known, even in the classical profession of
law, there are still a few practitioners who have gained their knowledge by home
study and experience. Characteristically, the members of the profession are
graduates of law schools, but some few of their fellow professionals whose status
is equal to theirs, whose attainments are the same, and whose word is the same did
not enjoy that opportunity. Such persons are not barred from the exemption. The
word ‘‘customarily’’ implies that in the vast majority of cases the specific
academic training is a prerequisite for entrance into the profession. It makes the
exemption available to the occasional lawyer who has not gone to law school, or
the occasional chemist who is not the possessor of a degree in chemistry, etc., but
it does not include the members of such quasi-professions as journalism in which
the bulk of the employees have acquired their skill by experience rather than by
any formal specialized training. It should be noted also that many employees in
these quasi-professions may qualify for exemption under other sections of the
regulations in subpart A of this part or under the alternative paragraph of the
‘‘professional’’ definition applicable to the artistic fields.

(e)(1) Generally speaking the professions which meet the requirement for a
prolonged course of specialized intellectual instruction and study include law,
medicine, nursing, accounting, actuarial computation, engineering, architecture,
teaching, various types of physical, chemical, and biological sciences, including
pharmacy and registered or certified medical technology and so forth. The typical
Add. 37 
symbol of the professional training and the best prima facie evidence of its
possession is, of course, the appropriate academic degree, and in these professions
an advanced academic degree is a standard (if not universal) prequisite. In the case
of registered (or certified) medical technologists, successful completion of 3
academic years of preprofessional study in an accredited college or university plus
a fourth year of professional course work in a school of medical technology
approved by the Council of Medical Education of the American Medical
Association will be recognized as a prolonged course of specialized intellectual
instruction and study. Registered nurses have traditionally been recognized as
professional employees by the Division in its enforcement of the act. Although, in
some cases, the course of study has become shortened (but more concentrated),
nurses who are registered by the appropriate State examining board will continue
to be recognized as having met the requirement of § 541.3(a)(1) of the regulations.

(2) The areas in which professional exemptions may be available are

expanding. As knowledge is developed, academic training is broadened, degrees
are offered in new and diverse fields, specialties are created and the true specialist,
so trained, who is given new and greater responsibilities, comes closer to meeting
the tests. However, just as an excellent legal stenographer is not a lawyer, these
technical specialists must be more than highly skilled technicians. Many
employees in industry rise to executive or administrative positions by their natural
ability and good commonsense, combined with long experience with a company,
without the aid of a college education or degree in any area. A college education
would perhaps give an executive or administrator a more cultured and polished
approach but the necessary know-how for doing the executive job would depend
upon the person’s own inherent talent. The professional person, on the other hand,
attains his status after a prolonged course of specialized intellectual instruction and
study.

(f) Many accountants are exempt as professional employees (regardless of

whether they are employed by public accounting firms or by other types of
enterprises). (Some accountants may qualify for exemption as bona fide
administrative employees.) However, exemption of accountants, as in the case of
other occupational groups (see § 541.308), must be determined on the basis of the
individual employee’s duties and the other criteria in the regulations. It has been
the Divisions’ experience that certified public accountants who meet the salary
requirement of the regulations will, except in unusual cases, meet the requirements
of the professional exemption since they meet the tests contained in § 541.3.
Similarly, accountants who are not certified public accountants may also be
exempt as professional employees if they actually perform work which requires the

Add. 38 
consistent exercise of discretion and judgment and otherwise meet the tests
prescribed in the definition of ‘‘professional’’ employee. Accounting clerks,
junior accountants, and other accountants, on the other hand, normally perform a
great deal of routine work which is not an essential part of and necessarily incident
to any professional work which they may do. Where these facts are found such
accountants are not exempt. The title ‘‘Junior Accountant,’’ however, is not
determinative of failure to qualify for exemption any more than the title ‘‘Senior
Accountant’’ would necessarily imply that the employee is exempt.

(g)(1) A requisite for exemption as a teacher is the condition that the employee is
‘‘employed and engaged’’ in this activity as a teacher in the school system, or
educational establishment or institution by which he is employed.

(2) ‘‘Employed and engaged as a teacher’’ denotes employment and

engagement in the named specific occupational category as a requisite for
exemption. Teaching consists of the activities of teaching, tutoring, instructing,
lecturing, and the like in the activity of imparting knowledge. Teaching personnel
may include the following (although not necessarily limited to): Regular academic
teachers’ teachers of kindergarten or nursery school pupils or of gifted or
handicapped children; teachers of skilled and semiskilled trades and occupations;
teachers engaged in automobile driving instruction; aircraft flight instructors; home
economics teachers; and vocal or instrumental music instructors. Those faculty
members who are engaged as teachers but also spend a considerable amount of
their time in extracurricular activities such as coaching athletic teams or acting as
moderators or advisers in such areas as drama, forensics, or journalism are engaged
in teaching. Such activities are a recognized part of the school’s responsibility in
contributing to the educational development of the student.

(3) Within the public schools of all the States, certificates, whether conditional
or unconditional, have become a uniform requirement for employment as a teacher
at the elementary and secondary levels. The possession of an elementary or
secondary teacher’s certificate provide a uniform means of identifying the
individuals contemplated as being within the scope of the exemption provided by
the statutory language and defined in § 541.3(a)(3) with respect to all teachers
employed in public schools and those private schools who possess State
certificates. However, the private schools of all the States are not uniform in
requiring a certificate for employment as an elementary or secondary school
teacher and teacher’s certificates are not generally necessary for employment as a
teacher in institutions of higher education or other educational establishments
which rely on other qualification standards. Therefore, a teacher who is not

Add. 39 
certified but is engaged in teaching in such a school may be considered for
exemption provided that such teacher is employed as a teacher by the employing
school or school system and satisfies the other requirements of § 541.3.

(4) Whether certification is conditional or unconditional will not affect the

determination as to employment within the scope of the exemption contemplated
by this section. There is no standard terminology within the States referring to the
different kinds of certificates. The meanings of such labels as permanent, standard,
provisional, temporary, emergency, professional, highest standard, limited, and
unlimited vary widely. For the purpose of this section, the terminology affixed by
the particular State in designating the certificates does not affect the determination
of the exempt status of the individual.

29 C.F.R. § 541.302 Artistic professions.

* * * * *

(c)(1) The work must be original and creative in character, as opposed to work
which can be produced by a person endowed with general manual or intellectual
ability and training. In the field of music there should be little difficulty in
ascertaining the application of the requirement. Musicians, composers, conductors,
soloists, all are engaged in original and creative work within the sense of this
definition. In the plastic and graphic arts the requirement is, generally speaking,
met by painters who at most are given the subject matter of their painting. It is
similarly met by cartoonists who are merely told the title or underlying concept of
a cartoon and then must rely on their own creative powers to express the concept.
It would not normally be met by a peron who is employed as a copyist, or as an
‘‘animator’’ of motion-picture cartoons, or as a retoucher of photographs since it is
not believed that such work is properly described as creative in character.

* * * * *

Add. 40 
29 C.F.R. § 541.308 Nonexempt work generally.

(a) It has been the Divisions’ experience that some employers erroneously
believe that anyone employed in the field of accountancy, engineering, or other
professional fields, will qualify for exemption as a professional employee by virtue
of such employment. While there are many exempt employees in these fields, the
exemption of individual depends upon his duties and other qualifications.

* * * * *

Add. 41 
 29 C.F.R. Pt. 541 (1988) (excerpts)

541.302 Learned professions.

* * * * *

(e) (1) Generally speaking the professions which meet the requirement for a
prolonged course of specialized intellectual instruction and study include law,
medicine, nursing, accounting, actuarial computation, engineering, architecture,
teaching, various types of physical, chemical, and biological sciences, including
pharmacy and registered or certified medical technology and so forth. The typical
symbol of the professional training and the best prima facie evidence of its
possession is, of course, the appropriate academic degree, and in these professions
an advanced academic degree is a standard (if not universal) prerequisite. In the
case of registered (or certified) medical technologists, successful completion of 3
academic years of preprofessional study in an accredited college or university plus
a fourth year of professional course work in a school of medical technology
approved by the Council of Medical Education of the American Medical
Association will be recognized as a prolonged course of specialized intellectual
instruction and study. Registered nurses have traditionally been recognized as
professional employees by the Division in its enforcement of the act. Although, in
some cases, the course of study has become shortened (but more concentrated),
nurses who are registered by the appropriate State examining board will continue
to be recognized as having met the requirement of § 541.3(a)(1) of the regulations.

* * * * *

(f) Many accountants are exempt as professional employees (regardless of

whether they are employed by public accounting firms or by other types of
enterprises). (Some accountants may qualify for exemption as bona fide
administrative employees.) However, exemption of accountants, as in the case of
other occupational groups (see § 541.308), must be determined on the basis of the
individual employee’s duties and the other criteria in the regulations. It has been
the Divisions’ experience that certified public accountants who meet the salary
requirement of the regulations will, except in unusual cases, meet the requirements
of the professional exemption since they meet the tests contained in § 541.3.
Similarly, accountants who are not certified public accountants may also be
exempt as professional employees if they actually perform work which requires the
consistent exercise of discretion and judgment and otherwise meet the tests
prescribed in the definition of “professional” employee. Accounting clerks, junior
Add. 42 
accountants, and other accountants, on the other hand, normally perform a great
deal of routine work which is not an essential part of and necessarily incident to
any professional work which they may do. Where these facts are found such
accountants are not exempt. The title “Junior Accountant,” however, is not
determinative of failure to qualify for exemption any more than the title “Senior
Accountant” would necessarily imply that the employee is exempt.

Add. 43 
 CERTIFICATE OF SERVICE

In accordance with Federal Rule of Appellate Procedure 25(d)(2), I hereby

certify that the foregoing BRIEF OF APPELLEES JASON CAMPBELL AND

SARAH SOBEK, ET AL. was timely filed under Rule 25(a)(2)(B) by sending the

original and 7 copies of the briefby overnight mail to the clerk's office on January

29,2010.

I further certify that, on this date, two copies of the foregoing brief were

served on the parties listed below by overnight mail.

DANIELJ. THOMASCH
ORRICK, HERRINGTON & SUTCLIFF LLP
666 Fifth Avenue
New York, NY 10103-0001

NORMANC. HILE
JULIE A. TOTTEN
ORRICK, HERRINGTON & SUTCLIFF LLP
400 Capital Mall, Suite 3000
Sacramento, CA 95814-4407

LYNNE C. HERMLE
JOSEPH C. LIBURT
ORRICK, HERRINGTON & SUTCLIFF LLP
1000 Marsh Road
Menlo Park, CA 94025