Cortina v. North Am. Title Co.

Filed 5/29/26 CERTIFIED FOR PARTIAL PUBLICATION * IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIFTH APPELLATE DISTRICT CAROLYN CORTINA et al., F085389 Plaintiffs and Respondents, (Super. Ct. No. 07CECG01169) v. NORTH AMERICAN TITLE COMPANY, OPINION Defendant and Appellant. APPEAL from a judgment of the Superior Court of Fresno County. Jeffrey Y. Hamilton, Jr., Judge. O’Melveny & Myers, David Marroso, Adam J. Karr, Anton Metlitsky, Jenya Godina; McCormick, Barstow, Sheppard, Wayte & Carruth, Scott M. Reddie; Morgan, Lewis & Bockius, Barbara J. Miller and John D. Hayashi for Defendant and Appellant. Wagner, Jones, Kopfman & Artenian, Andrew B. Jones, Lawrence M. Artenian; Cornwell & Sample, Stephen R. Cornwell, René Turner Sample; Wanger Jones Helsley and Patrick D. Toole for Plaintiffs and Respondents. -ooOoo- In Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th 1 (Duran), Justice Carol Corrigan used the phrase “exceedingly rare beast” to describe “a wage and hour class * Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is certified for publication with the exception of part III of the Discussion. action that proceeded through trial to verdict.” (Id. at p. 12.) The plaintiffs in Duran had alleged their employer misclassified them as exempt from the laws requiring premium pay for overtime and mandatory meal breaks and rest periods during the workday. Such lawsuits are notoriously difficult to manage on a large scale, are often deemed unsuitable for class treatment, and usually settle if class certification is granted. The Duran action, which involved a class of 260 people, lasted more than 16 years and ultimately ended in decertification due to the unmanageability of issues arising from the employer’s defenses. We dare say the present case is even rarer and more beastly than Duran. The original complaint was filed 19 years ago. There have been numerous interlocutory appeals and writ proceedings, the most recent of which involved review by the California Supreme Court. (North American Title Co. v. Superior Court (2024) 17 Cal.5th 155.) At long last, an appeal of the underlying judgment is presented for review on the merits. Unfortunately, the end is still nowhere in sight. The wage and hour claims of approximately 700 plaintiffs, divided into two classes based on whether they had been designated as exempt or nonexempt employees, were litigated in a bifurcated bench trial. Upon conclusion of the first phase, the “Nonexempt” class was ordered decertified. However, the trial court ruled against the defendant employer on certain defenses asserted as to the claims of the “Exempt” class. The court then appointed a referee to conduct the second phase of trial, doing so without the parties’ consent and over defendant’s strenuous objections. The reference proceedings lasted years and included live testimony from over 230 class members, all leading to the entry of a $43 million judgment. A nonconsensual reference of the scope and magnitude ordered in this case is not merely a rare occurrence. It appears unprecedented in our state jurisprudence. A trial court’s authority to delegate matters to a referee without the parties’ consent is strictly circumscribed by the California Constitution and Code of Civil Procedure. The reference 2. proceedings below were entirely unauthorized. This error alone compels reversal of the judgment. Prejudicial errors were also committed in the first phase of trial, which became known as the “liability phase” even though it did not truly resolve all issues of liability. Critical aspects of the trial plan and format contravened the holdings of Duran. The employer’s affirmative defenses were also rejected out of hand, on a classwide basis, due to misinterpretations of the applicable law. The employer relied on two different Labor Code exemptions, both of which largely depend on how employees spend their time during the workday. To provide a very simplified primer, certain types of employees may be exempt from California’s overtime laws if they spend over half of their time performing duties and tasks meeting the legal definitions of exempt work. If an employee spends 49 percent of their time on exempt work, such as managerial tasks, but the other 51 percent of their time on nonexempt work, they do not qualify for the exemption. “Given California’s uniquely quantitative approach … [citation], some proof about how individual employees use their time will often be necessary to accurately determine an employer’s overtime liability [on a classwide basis].” (Duran, supra, 59 Cal.4th at p. 27.) It was alleged that all members of the roughly 400-person “Exempt” class, despite having a variety of different job titles and working in different offices throughout the state over a 10-year period, all performed the same allegedly nonexempt job the same way, all the time. One problem with this theory was that several cohorts within the class, e.g., “Branch Managers,” indisputably did perform exempt work on a regular basis. The issue then became how to make a classwide showing that, despite variation among and between class members, none met the 51 percent threshold. In the Branch Manager example, plaintiffs elicited testimony from roughly 15 percent of the cohort (about 24 out of 156 people) and argued the work habits and experiences of those witnesses could be relied upon as representative of the entire group. 3. The Duran opinion rejects such reasoning as scientifically invalid. “If sampling is used to estimate the extent of a party’s liability, care must be taken to ensure that the methodology produces reliable results.” (Duran, supra, 59 Cal.4th at p. 42.) A valid extrapolation model requires expert input to determine the appropriate sample size and margin of error, and the sample group of witnesses must be randomly selected. (Id. at pp. 42–43.) None of those requirements were met. Without common proof of employee misclassification, the trier of fact “may have sufficient evidence to make judgments as to particular individuals, but lacks a basis to extrapolate from those findings to a class-wide judgment.” (Marlo v. United Parcel Service, Inc. (C.D.Cal. 2008) 251 F.R.D. 476, 485 (Marlo).) The absence of common proof leaves the alternative of hearing individual testimony from hundreds of class members, which turns the class action device on its head. In the “liability phase,” the trial court imposed limits on how many witnesses could testify. The number was arbitrarily set at approximately 100 witnesses for each side to prove or refute the claims of all 700 people comprising both classes. The court later authorized individual testimony from all members of the “Exempt” class in the second phase of trial (such authorization being the main reason for appointing a referee) but prohibited the employer from questioning the witnesses on matters related to its exemption defenses. The exemption defenses were deemed to have failed on a classwide basis in the first phase of trial. As held in Duran, “decertification must be ordered whenever a trial plan proves unworkable.” (Duran, supra, 59 Cal.4th at p. 32.) Here, the obligation to decertify both classes was apparent during the initial phase of trial. Failure to decertify the “Exempt” class, in combination with the other prejudicial errors, warrants reversal and a decertification order by this court. (Id. at pp. 24, 50.) The cause will be remanded for retrial of the named plaintiffs’ individual claims. “The trial court is of course free to entertain a new certification motion on remand [as to the “Exempt” class], but if it 4. decides to proceed with a class action it must apply the guidelines set out here.” (Id. at p. 33.) FACTUAL AND PROCEDURAL BACKGROUND Parties Defendant below and appellant herein, and respondent to the cross-appeal, is identified in the operative complaint (amended posttrial and shortly before entry of judgment) as “North American Title Company, (formerly known as North American Title Company, Inc. and CalAtlantic Title, Inc., and now known as Lennar Title, Inc.).” (Bolding and some capitalization omitted.) In the appellate briefing, this party identifies itself as “formerly known as North American Title Company and now called Lennar Title, Inc.” We will refer to this party, in its capacity as both appellant and respondent, as defendant or NATC. 1 Plaintiffs below and Respondents herein, and appellants in the cross-appeal, include the following 11 individuals hereinafter collectively referred to as the “named plaintiffs” or “class representatives”: Kimberly Baker, Judith Bates, Catherine Bell, Melodie Benton, Carolyn Cortina, Martha Dominguez, Cheryl Fuller, Laurel Johnstone, Teresa Spencer, Tina Texeira, and Mary Weidmark. Regarding both the appeal and cross-appeal, the term “plaintiffs” will collectively refer to the same 11 individuals and, where applicable, all unnamed plaintiffs classified as exempt employees while employed by NATC during the class period, i.e., the “Exempt” class. The terms defined in the previous paragraph do not apply to Janet Doran. Her unique circumstances were the subject of a prior appeal, Cortina v. North American Title Co. (May 30, 2019, F074938) [nonpub. opn.]. There are no claims in the appeal or 1 The California Style Manual states, “The terms ‘cross-appellant’ and ‘cross-respondent’ are never used in appellate titles and should be avoided in the body of opinions.” (Cal. Style Manual (4th ed. 2000) § 6:3, p. 212.) 5. cross-appeal regarding the trial court’s entry of judgment against Doran. Accordingly, the part of the judgment concerning Doran will be affirmed. A codefendant, North American Services, LLC (“NAS”), prevailed at trial against both classes and all named plaintiffs. The term “defendants” will collectively refer to both NATC and NAS. There are no claims in the appeal or cross-appeal regarding the trial court’s entry of judgment in favor of NAS. Accordingly, the part of the judgment concerning NAS will be affirmed. Factual Background Overview The class period for all claims against NATC was April 17, 2003, through December 31, 2012. During that time, NATC employed several hundred people as escrow officers and in other escrow-related positions. Those employees collectively worked in over 80 offices located in 23 counties throughout California. As best we can discern from the record, NATC and its employees used the terms “branch” and “office” synonymously. What do escrow officers do? Defendant’s opening brief offers this summary: “Escrow officers employed by [NATC] serve as fiduciaries who play an integral part in real estate transactions by receiving, holding, and transferring funds; reviewing contracts, title reports, insurance policies, and loan documents; preparing and following escrow instructions; and checking for and taking affirmative actions to clear encumbrances such as liens or unpaid taxes, among other varying duties. [Record citations.] Escrow officers must make important decisions that can expose their employer to liability, including the critical determination that all requisite conditions for escrow closure have been satisfied.” The summary in NATC’s official job description identifies these responsibilities: “Preparation of all documents associated with the processing and closing of escrow, conveyance of title, recording of documents, clearing of title requirements and issuance of title insurance. Interviews escrow principals to obtain pertinent facts, directs the preparation of escrow 6.  instructions, drawing of documents, issuance of title policies and the disbursement of funds, and otherwise assists escrow principals, their lenders, and/or agents in the consummation of escrows involving the financing or sale of single family and small multi-family residences. Reconciles escrow instructions with commitment and/or preliminary title report. Develops and maintains business by the extensive application of basic marketing and customer service techniques.” Plaintiffs generally contend that an escrow officer’s job is routine and standardized. At trial they introduced into evidence a flow chart summarizing what they referred to as the “Escrow Process.” (A copy of that exhibit, which was partially created by class member Christine English, is attached to this opinion as Appendix A, post, at page 138.) One class member described escrow officers as “glorified data-processing people.” The more common sentiment was that escrow work is “complicated” and presents “unique” challenges from one transaction to another. Many witnesses agreed the “Escrow Process” chart was accurate, though perhaps overly “basic” in its synopsis. Other witnesses were more critical of it, contending it was incomplete. By all accounts, the profession was very demanding but also lucrative. Escrow officers progress in their career by building a “book of business.” This involves cultivating relationships with realtors, banking professionals, and others in the real estate industry. Escrow officers with a reputation for meeting their closing deadlines and error-free transactions develop a client base that refers work specifically to them. Companies such as NATC compete for and hire escrow officers based on their books of business, which gives such individuals leverage in a thriving real estate market. In the early part of the class period (circa 2003 to 2006), experienced escrow officers with an established book of business could easily command base salaries ranging from $50,000 to $70,000 per year, and higher. Those figures did not include other performance-based compensation. 7.  NATC had “[d]esk [i]ncentive” and “[b]ranch [i]ncentive” policies under which escrow officers and other employees received a percentage of the revenue they generated, individually and as a branch, above certain threshold amounts. For example, class member Dawna Monroe’s base salary gradually increased from $51,600 to $69,600 as she was promoted from escrow officer to “Unit Manager,” and later to “Branch Manager.” She testified that in addition to her salary, “I think average after taxes, my commission would run about [$]6[,000] to [$]8,000” per month. The most striking example among the higher-earning class members was Gina Oldham, who held the position of Branch Manager. In the year 2003, she earned $103,500 in base salary plus $184,906 in incentive pay, which defendant argued constituted “commissions” for purposes of a separate exemption defense. Oldham’s incentive compensation also exceeded her base salary in 2004, for combined earnings of over $250,000. In 2005 her base salary increased to $15,000 per month ($180,000 annually), but the appellate record does not show her incentive compensation for that year. During the second phase of trial, NATC submitted evidence showing that most people in the Exempt class had at least some pay periods where their incentive compensation exceeded the amount they received in base salary. A notable example was Christine English, who at different times held the positions of “Advisory Escrow Officer” and “Senior Escrow Officer.” Her incentive compensation exceeded her base salary in over 40 percent of her pay periods during eight years of employment with NATC. Job Titles and Classifications In 2003, most NATC employees involved in escrow and escrow-related work were internally classified and treated as exempt employees. In other words, they were not paid extra for working overtime. Employees in this category included those with the job titles of Senior Escrow Officer, Special Projects Escrow Officer, and Escrow Officer Supervisor. 8.  In addition to the job titles noted above, some evidence indicates that two different “Escrow Officer” positions, one exempt and one nonexempt, existed prior to 2004. The record is murky on this point, and defendant should have clarified it at trial. The apparently nonexempt position was Escrow Officer (job code 1169), and the exempt position was called Escrow Officer California (job code 1032). The former was an entry-level job. The latter, i.e., Escrow Officer California, required “[o]ne year [of] Escrow Officer experience … or two years general escrow experience.” Defendant’s discovery responses show these as two distinct positions, and some evidence in the second phase of trial reportedly showed employees being paid overtime as “Escrow Officers” in 2003. Nevertheless, since they appear to have all been lumped into the “Exempt” class below, we use the term “2003 Escrow Officer” in reference to plaintiffs classified under either or both job codes (1032 and 1169) prior to January 2004. NATC conducted a “Staffing Study” in 2003 to determine how many hours its employees were working, including those employees it classified as exempt. The Staffing Study preceded a corporate decision to reclassify certain positions and create a new exempt position called Escrow Unit Manager (Unit Manager). Internal company documents state, in pertinent part: “The Escrow Officer Job Title became overly broad and needed to be narrowed in scope. The Escrow Officer Job Title is being split into two Job Titles, one is Exempt and one is Non-Exempt. Incumbents fulfilling the 80% Exempt Duties Test and who manage two or more individuals, may be moved to the new Exempt Job Title,” i.e., designated as an exempt Unit Manager. 2 2 Other parts of the same documents refer to The Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et seq.), thus indicating NATC’s reliance on federal law. The reference to an “80% Exempt Duties Test” alludes to older versions of federal regulations that were revised in 2004. (See fn. 3, post.) Under those older regulations, the overtime exemptions for managerial and administrative employees required that 80 percent of the employee’s time be devoted to exempt work. (29 C.F.R. former §§ 541.1(e) (2003), 541.2(d) (2003), 541.112(a) (2003), 541.209(a) (2003).) In short, NATC ostensibly imposed upon itself a more stringent “duties test” than was required under California law. 9.  Effective January 2004, defendant reclassified the positions of 2003 Escrow Officer, Senior Escrow Officer, Special Projects Escrow Officer, and Escrow Officer Supervisor as nonexempt and thus eligible for overtime compensation. Some employees who previously held those positions were moved into the exempt position of Unit Manager. “Unit” referred to a group consisting of one escrow officer and at least two assistants over whom the escrow officer had supervisory authority. Four additional job titles are of particular importance to this case: Advisory Escrow Officer, Branch Manager, Escrow Manager, and Escrow Operations Manager. NATC classified these positions as exempt both before and after 2004. Procedural History A detailed summary of the trial court proceedings, from the point of class certification through entry of judgment, is set forth in the Discussion, post. We provide here an abbreviated procedural history. In April 2007, Carolyn Cortina filed a putative class action complaint against NATC alleging various Labor Code violations for failing to pay overtime, and failing to provide meal breaks and rest periods, to all of its California employees “in the position of Escrow Officer or [an] equivalent position, however titled ….” In addition to the statutory claims, a cause of action was pleaded under Business and Professions Code section 17200 et seq., commonly known as the unfair competition law (UCL). Cortina was originally hired as a nonexempt Escrow Assistant. She was promoted to Unit Manager in 2004, bypassing the nonexempt Escrow Officer position, and worked as a Unit Manager until leaving the company in 2005. In a declaration filed in support of class certification, Cortina alleged the job titles of Unit Manager and Escrow Officer were interchangeable. She further declared, “I did not manage anyone.” The complaint was amended in 2009, adding four more proposed class representatives. Those parties had previously worked in positions including the nonexempt job titles of Escrow Assistant and Junior Escrow Officer. In 2010, the trial 10. court certified two classes. A second amended complaint was filed shortly thereafter, adding more class representatives and naming NAS as a codefendant. NAS was sued pursuant to a theory of liability as a joint employer. A class of current and former employees whom NATC had classified as nonexempt was labeled the “Non-Exempt Class” (Nonexempt class). It was defined to include the job titles of Junior Escrow Officer, Escrow Officer, Senior Escrow Officer, Special Projects Escrow Officer, and Escrow Supervisor (also known as an Escrow Officer Supervisor). The position of Escrow Assistant was specifically excluded from the class definition. A class of current and former employees whom NATC had classified as exempt was labeled the “Exempt Class” (Exempt class.) It was defined to include the following job titles: “[2003] Escrow Officer, Senior Escrow Officer, Special Projects Escrow Officer, Escrow Supervisor, Advisory Escrow Officer, Escrow Unit Manager, Escrow Manager, Branch Manager, and Escrow Operations Manager.” The position of Escrow Assistant was specifically excluded from the class definition. The claims of the Nonexempt class were different from those of the Exempt class. The Nonexempt class alleged NATC had policies and practices prohibiting them from reporting overtime on their timesheets and/or pressuring them not to report overtime or to underreport overtime, and requiring or pressuring them to skip meal breaks and rest periods. In other words, policies or practices requiring class members to work “off the clock.” The claims of the Exempt class were based on NATC’s alleged misclassification of them as exempt employees when, according to their allegations, they were in fact nonexempt. Put differently, the Exempt class alleged entitlement to overtime compensation and meal breaks and rest periods, which they did not receive. Plaintiffs later withdrew their claims for missed rest periods. 11.  Prior to trial, both classes dismissed their statutory causes of action under the Labor Code and elected to proceed solely on the UCL claim. Trial began in September 2015. Witness testimony in the first phase of trial ended in December 2015. Written submissions followed, including closing briefs. In October 2016, the trial court issued a statement of decision. The court ruled against NATC on its exemption defenses. It further ordered the appointment of a referee to make findings and recommendations on the claims of the Exempt class for restitution under the UCL. The Nonexempt class was ordered decertified and the individual claims of its class representatives were also referred to the referee. In March 2021, the trial court issued an order adopting nearly all of the referee’s findings and recommendations. Later that year, due to what defendant labels “corporate reorganizations,” plaintiffs amended their complaint two more times. Issues surrounding the “corporate reorganizations” caused delays in the entry of judgment. On August 31, 2022, the trial court entered judgment in favor of the named plaintiffs, except Kimberly Baker and Carolyn Cortina, on their individual claims. Judgment was likewise entered for the Exempt class against NATC. NATC’s financial liability was calculated at $43,547,946, with prejudgment interest accounting for over half of the sum. Judgment was entered in favor of NATC as to the individual claims of Baker and Cortina. Defendant filed a motion for new trial, as did plaintiffs Baker and Cortina. While the motions for new trial were pending, defendant sought writ relief from this court on matters unrelated to the present appeal. Further background on the writ proceedings can be found in North American Title Co. v. Superior Court, supra, 17 Cal.5th 155. The writ proceedings resulted in a stay of the underlying action and denial of the motions for new trial by operation of law. Meanwhile, both sides filed timely notices of appeal. The remittitur in the writ matter issued on July 14, 2025. 12.  DISCUSSION The issues in this case are numerous, complex, and require familiarity with several areas of law. Part I of the Discussion provides a broad legal overview before addressing defendant’s claims regarding the first phase of the trial. Part II addresses defendant’s claims regarding the second phase of trial, i.e., the nonconsensual reference proceedings. Part III addresses plaintiffs’ cross-appeal. Many of the issues present questions of law, which are reviewed de novo. (Leider v. Lewis (2017) 2 Cal.5th 1121, 1127.) “We review class action trial management decisions for abuse of discretion.” (Duran, supra, 59 Cal.4th at p. 49.) A trial court abuses its discretion when it makes decisions based on erroneous legal assumptions or reasoning. (American Honda Motor Co., Inc. v. Superior Court (2011) 199 Cal.App.4th 1367, 1372; Mejia v. City of Los Angeles (2007) 156 Cal.App.4th 151, 158.) I. First Phase of Trial Legal Overview A. California Wage and Hour Laws In California, claims for unpaid wages are governed by the Labor Code and a series of wage orders promulgated by the Industrial Welfare Commission (IWC). (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1026 (Brinker).) The IWC is a state agency vested with the quasi-legislative power to develop and issue wage orders, i.e., regulations “specifying minimum requirements with respect to wages, hours, and working conditions” for all industries and occupations. (Ibid.) Although it was defunded by the Legislature in 2004, the IWC’s wage orders continue to have the same force of law as when the agency was operational. (Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833, 838, fn. 6; see Brinker, at p. 1027 [“The IWC’s wage orders are to be accorded the same dignity as statutes”].) 13.  “Of the 18 wage orders in effect today, ‘16 cover[] specific industries and occupations, one cover[s] all employees not covered by an industry or occupation order, and a general minimum wage order amend[s] all others to conform to the amount of the minimum wage currently set by statute.’ ” (Mendiola v. CPS Security Solutions, Inc., supra, 60 Cal.4th at pp. 838–839.) IWC wage order No. 4-2001 (Cal. Code Regs., tit. 8, § 11040 (Wage Order 4)) governs wages, hours, and working conditions for all persons employed in “professional, technical, clerical, mechanical, and similar occupations.” (Id., subd. 1.) We accept the parties’ shared contention that Wage Order 4 applies to the claims and defenses in this case. (See id., subd. 2(P) [providing a nonexhaustive list of included occupations].) The Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et seq. (FLSA)), along with regulations promulgated by the United States Department of Labor, is the “federal counterpart” to California’s state wage and hour laws. (United Parcel Service Wage & Hour Cases (2010) 190 Cal.App.4th 1001, 1009 (UPS Wage & Hour Cases); see Montano v. Montrose Restaurant Associates (5th Cir. 2015) 800 F.3d 186, 190 [noting the Department of Labor “is authorized to promulgate rules interpreting and clarifying the FLSA”].) The FLSA “does not preempt state law in this area, and therefore state law is controlling to the extent it is more protective of workers than federal law.” (Alvarado v. Dart Container Corp. of California (2018) 4 Cal.5th 542, 554.) “In the absence of controlling or conflicting California law, California courts generally look to federal regulations under the FLSA for guidance.” (See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, 903.) Our state has a public policy “favoring an eight-hour workday and a six-day 40-hour workweek, and discouraging employers from imposing work in excess of those limits.” (Alvarado v. Dart Container Corp. of California, supra, 4 Cal.5th at p. 561.) The concept of “overtime” is thus defined as “[a]ny work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek and the 14. first eight hours worked on the seventh day of work in any one workweek.” (Lab. Code, § 510, subd. (a); accord, Wage Order 4, subd. 3(A)(1).) Unless subject to an exemption, overtime must be compensated at a premium rate of at least 150 percent of the employee’s regular rate of pay (commonly known as “time and a half”). Any work in excess of 12 hours in one day, or in excess of eight hours on any seventh day of a workweek, must be compensated by no less than double the employee’s regular rate of pay. (Lab. Code, § 510, subd. (a); Wage Order 4, subd. 3(A)(1)(a), (b).) Labor Code section 1194 provides for a cause of action against an employer to recover unpaid overtime compensation. Nonexempt employees are further entitled to meal breaks and rest periods during the workday (id., § 512, subd. (a); Wage Order 4, subds. 11(A), 12(A)), and those rights are enforceable under Labor Code section 226.7. Missed breaks are compensable by “one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided.” (Lab. Code, § 226.7, subd. (c); accord, Wage Order 4, subds. 11(B), 12(B).) B. Relevant Exemptions The Labor Code authorizes exemptions from the requirement of premium overtime pay for “executive” and “administrative” employees. (Lab. Code, § 515, subd. (a).) The applicable wage orders establish such exemptions and detail the prerequisites. Three elements are common to both exemptions. The employee must (1) be “primarily engaged in the duties that meet the test of the exemption”; (2) “regularly exercise[] discretion and independent judgment in performing those duties”; and (3) earn “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” (Ibid.) Employees who qualify for either exemption will also be exempt from the meal and rest period requirements of Labor Code section 512. (E.g., Wage Order 4, subd. 1(A); see Lab. Code, § 226.7, subd. (e).) “ ‘[T]he 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 15. employee’s exemption.’ ” (Negri v. Koning & Associates (2013) 216 Cal.App.4th 392, 397 (Negri). “[W]e narrowly construe exemptions against the employer, ‘and their application is limited to those employees plainly and unmistakably within their terms.’ ” (Peabody v. Time Warner Cable, Inc. (2014) 59 Cal.4th 662, 667.) Nevertheless, “[d]etermining whether or not all of the elements of the exemption have been established is a fact-intensive inquiry.” (UPS Wage & Hour Cases, supra, 190 Cal.App.4th at p. 1014.) The applicability of an exemption is a mixed question of law and fact, and the analysis can be complicated. (Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794 (Ramirez).) The requirement of “ ‘primarily’ ” engaging in duties meeting the tests for the exemptions means spending “more than one-half of [one’s] worktime” on such duties. (Lab. Code, § 515, subd. (e); accord, Wage Order 4, subd. 2(O).) The trier of fact must, “first and foremost,” determine what work is “actually performed by the employee during the course of the workweek.” The amount of time the employee actually “spends on such work” must then be considered “together with the employer’s realistic expectations and the realistic requirements of the job.” (Wage Order 4, subds. 1(A)(1)(e), (2)(f).) In other words, this element alone contemplates a four-part assessment of (1) the tasks actually performed by the employee; (2) the amount of time devoted to each task; (3) the employer’s realistic expectations of how the employee will or should be spending their time; and (4) how those facts align with the realistic requirements of the job. (Judicial Council of California Civil Jury Instructions (CACI) Nos. 2720, 2721; see Safeway Wage & Hour Cases (2019) 43 Cal.App.5th 665, 671, 679; Martinez v. Landry’s Restaurants, Inc. (2018) 26 Cal.App.5th 783, 797.) In conjunction with that assessment, the trier of fact must also evaluate the degree to which the employee’s job involves the exercise of discretion and independent judgment. (Lab. Code, § 515, subd. (a).) “Whether an employee satisfies the elements of the exemption is a question of fact,” but the “appropriate manner of evaluating the employee’s duties is a question of 16. law.” (Heyen v. Safeway Inc. (2013) 216 Cal.App.4th 795, 817.) In a jury trial, the trier of fact will be instructed on which tasks may be characterized as exempt or nonexempt. (See Directions for Use to CACI Nos. 2720, 2721.) In a bench trial, as was conducted in this case, the trial court must perform the legal analysis itself. In determining whether a given task qualifies as exempt or nonexempt work, the employee’s duties “shall be construed in the same manner” as under certain federal regulations “effective as of the date of [the wage] order.” (Wage Order 4, subds. 1(A)(1)(e), (2)(f).) Due to the Legislature’s defunding of the IWC in 2004, the applicable law is frozen in time, to a certain extent, circa the early part of this century. (See Harris v. Superior Court (2011) 53 Cal.4th 170, 190 (Harris) [“The IWC Statement issued in connection with Wage Order [4] clearly states that ‘only those federal regulations specifically cited in its wage orders, and in effect at the time of promulgation’ shall be applied in defining exempt duties under California law”].) Wage Order 4 was last revised effective January 1, 2001, and it incorporates several federal regulations that no longer exist. The California Supreme Court has arguably suggested, however, that current federal regulations have some degree of “instructive” value since they are “ ‘intended to be consistent with the old regulations.’ ” (Gallardo v. AIG Domestic Claims, Inc. (9th Cir. 2015) 629 Fed.Appx. 783, 784, fn. 2, citing and quoting Harris, supra, 53 Cal.4th at p. 189, fn. 8.) At a minimum, the legal analysis requires cross-referencing and parsing older versions of multiple federal regulations as they existed in January 2001. 3 (E.g., Harris, at pp. 180–182.) 3 The IWC was defunded, and its operations ceased, effective July 1, 2004. (Huntington Memorial Hospital v. Superior Court (2005) 131 Cal.App.4th 893, 902, fn. 2; accord, IWC Web site <https://www.dir.ca.gov/IWC/IWC_Defunded.html> [as of May 29, 2026] [announcing the end of IWC operations], archived at <https://perma.cc/8GZH-R6JR>.) Approximately seven weeks later, in August 2004, the United States Department of Labor “substantially revised the FLSA overtime exemption regulations.” (Robinson-Smith v. Government Employees Ins. Co. (D.C. Cir. 2010) 590 F.3d 886, 892, fn. 6; accord, Combs v. Skyriver Communications, Inc. (2008) 159 17.  Another potentially complicated issue is the possibility of both exempt and nonexempt periods during a course of employment. (See, e.g., UPS Wage & Hour Cases, supra, 190 Cal.App.4th at p. 1013 [employee qualified for exemptions in three different positions held during employment period of over 10 years]). Here, roughly 25 percent of the Exempt class (around 100 members) held multiple allegedly exempt job positions during the nearly 10-year class period ending on December 31, 2012. Furthermore, there is precedent for examining and applying exemptions on a week-to-week basis. (Dunbar v. Albertson’s, Inc. (2006) 141 Cal.App.4th 1422, 1426–1427, 1430 (Dunbar).) The trier of fact may, however, “make reasonable inferences about a party’s activities during the relevant period based on his or her activities in earlier and later periods, particularly where there is nothing to suggest the employee’s duties and responsibilities changed significantly.” (Batze v. Safeway, Inc. (2017) 10 Cal.App.5th 440, 479.) Under federal law, employees who perform a sufficient combination of managerial and administrative duties may be classified as exempt. (29 C.F.R. § 541.708.) “In other words, work that is exempt under one section of the [overtime regulations] will not defeat the exemption under any other section.” (Ibid.) This approach implicitly recognizes that some jobs “may not fit comfortably” into only one exemption category, i.e., “executive, administrative, or professional.” 4 (Anderson v. City of Cleveland (E.D.Tenn. 2000) 90 F.Supp.2d 906, 915–916 [discussing a predecessor statute, former 29 C.F.R. § 541.600]; accord, Campanelli v. Hershey Co. (N.D.Cal. 2011) 765 F.Supp.2d 1185, 1197 [discussing 29 C.F.R. § 541.708].) Cal.App.4th 1242, 1255, fn. 5.) Due to the timing of those events, none of the IWC wage orders incorporate the August 2004 revisions to, or current version of, part 541 of title 29 of the Code of Federal Regulations. 4 A “[p]rofessional [e]xemption” also exists under California law, but it has no relevance to this case. (Wage Order 4, subd. 1(A)(3); see Lab. Code, § 515, subd. (a).) 18.  In a 2003 opinion letter, the Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE), wrote that it “construes state law, like federal law [citation], to permit the so-called ‘tacking’ of one type of exempt work with another type, so that, for example, an employee who spends more than 50% of his worktime performing exempt managerial and exempt administrative work would meet the ‘primarily engaged’ test.” (Dept. Industrial Relations, DLSE Opn. Letter No. 2003.05.23 (May 23, 2003) p. 5 [citing former 29 C.F.R. § 541.600].) As the state agency “ ‘ “empowered to enforce California’s labor laws,” ’ ” the DLSE’s opinion letters, “ ‘ “ ‘ “while not controlling … do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.” ’ ” ’ ” (Brinker, supra, 53 Cal.4th at p. 1029, fn. 11; e.g., Stone v. Alameda Health System (2024) 16 Cal.5th 1040, 1072; Hill v. R+L Carriers, Inc. (N.D.Cal. 2010) 690 F.Supp.2d 1001, 1008 [citing DLSE Opn. Letter No. 2003.05.23 (May 23, 2003) as an indication “California appears to recognize a … ‘combination’ exemption” similar to 29 C.F.R. § 541.708]; Campanelli v. Hershey Co., supra, 765 F.Supp.2d at p. 1197, fn. 22