Muldrow v. Surrex Solutions Corporation

Facts and Allegations:

Surrex Solutions was a nationwide wide IT recruiting firm, with its headquarters in southern California. Surrex employed Consulting Service Managers who helped recruit IT professionals and place them with employers. Consulting Service Managers were paid an average of approximately $60,000 “draw” with the potential to earn commissions. However, very few persons earned commissions.

Tyrone Muldrow, a former Consulting Service Manager, brought a class action lawsuit against his former employer asserting various wage & hour claims, including, among other things, compensation for missed overtime.

Surrex denied all allegations asserting that its Consulting Service Managers were exempt under either the commissioned-employee or the administrative exemption under IWC Wage Order 4.

In a published decision, the Court of Appeal affirmed the decision of the trial court classifying these Consulting Service Managers as exempt employees under the commissioned employee exemption. The Court of Appeal declined to follow federal law, and found that the class members were commissioned-employees even though the majority of employees do not earn commissions above their draw, and even though their commission earnings were calculated according to a convoluted formula that most class members did not understand.

Plaintiffs petitioned to the California Supreme Court and the Supreme Court took up the case for review. Upon review, the Supreme Court remanded the case back to the Court of Appeal with further instructions to analyze the case in light of the outcome of the recently decided California Supreme Court case of Brinker v. Superior Court. Then, the Court of Appeal reaffirmed their original decision. However, the Court of Appeal specifically noted that Plaintiffs new argument that Surrex “discouraged” meal periods and breaks was not considered. The Muldrow case is widely recognized and has been discussed at length.