Harris v. Investor’s Business Daily, Inc.

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Jul17

Harris v. Investor’s Business Daily, Inc.

Linda Chan

Know More: Employment law 2.0, Employment law

On June 28, 2006, the California Supreme Court unanimously denied review of Harris v. Investor’s Business Daily, Inc., 138 Cal. App. 4th 28 (2006).

Harris was a telemarketer who sold newspaper subscriptions. Her claims involved exempt misclassification, overtime denial, unlawful commission deduction, and unfair competition for unpaid overtime under federal Fair Labor Standards Act (FLSA).

The trial court certified a class action lawsuit on the unlawful commission deduction claim, but did not certify the class action on the overtime claim. The trial court dismissed the unfair competition claim and granted summary judgment on the remaining claims.

The court of appeal overturned the trial court. The court narrowed the definition of commission, which may limit payments constituting commissions if they are not based on a percentage of a product’s sales price. The case addressed performance-based compensation plans that provide for chargebacks. There are risks in implementing plans that refer to chargebacks or do not clearly identify situations where commissions are earned. An employee can base a California Unfair Competition claim on a FLSA violation which results in an extension of the statute of limitations.

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