All employees are presumed to be entitled to overtime pay, unless the employer can prove that the employee fits within a very narrow category of employees considered “white-collar” employees. It’s a common misconception that just because the employee is designated as a salaried employee and has a managerial or executive title that he or she is exempt from California wage and hour laws and not entitled to overtime pay. In reality, many salaried employees are entitled to overtime pay.
With California wage and hour laws, the law looks to what employees do the majority of their time.
For example: not untrue job titles, unrealistic job descriptions, or an employment agreement that characterizes his or her position as “exempt”. If an employee does not meet the regulatory requirements for exempt status, he or she will be deemed nonexempt and thus is entitled to overtime pay, mandatory rest and meal breaks, detailed paystub information, as well as other benefits and protections.
California wage and hour laws contain “white-collar” exemptions for executive, administrative, and professional employees, as they are described in California Wage Orders – not how an employer describes such jobs.
These three exempt employee categories share three common requirements. If any of these three are not met, the employee cannot be an exempt employee, without limitation or exception.
One, the employees must be paid a salary of at least twice California’s minimum wage – As of July 1, 2014, California’s minimum wage is $9 per hour, which translates into a salary of at least $3,120 per month and $37,440 annually. On January 1, 2016, California’s minimum wage increases to $10 per hour. At that time, the salary requirements will increase to $3467 per month and $41,600 annually.
Two, the employee must customarily and regularly exercise discretion and independent judgment in performance of their work.
“Discretion and independent judgment” means that the employee has to evaluate possible alternatives and choose or recommend (and the recommendation is given weight) a course of action. The choice has to be made free from immediate supervision and in regard to important matters of a business. Putting this in perspective, the shipping clerk may decide how to pack a shipment, the bookkeeper decides which ledger to post first, but those relatively minor choices do not count.
Further, discretion and independent judgment are distinguished from skills and procedures. Employees who merely use knowledge or follow procedures do not use discretion and independent judgment. For example, a sportscaster was found not to use discretion and independent judgment when his talent for putting together an entertaining sports newscast came from his skillful application of station guidelines and various techniques which were standard in the industry.
Three, the majority of the employee’s duties or work must be that which makes the employee exempt. In other words, to be considered an executive, the employee must be primarily engaged in executive duties, the administrative employee primarily engaged in administrative duties, and the professional employee engaged in his or her profession, as defined by the law.
What does being a Salaried employee mean?
Before going any further, we need to address the one upside of being a salaried employee—your pay almost never gets docked. Getting a salary means that the employee gets paid the same amount each pay period despite lack of work, poor work, or disciplinary problems and you cannot be docked for missing part of the day.
If an employer deducts from an employee’s “salary” for the quality or quantity of work performed, the employee is not salaried and not exempt. Unlike non-exempt or hourly employees, if there is no work to be done, the salaried employee must still be paid the full salary, while the hourly employee can be sent home and is only paid for the time at work. I guess this makes up for all those 60 plus hour work weeks and not taking a break and eating lunch at your desk.
While, deductions may be made for sick time or absences, they must be made for periods of one day or longer and according to a bona fide plan or practice of providing extra compensation for such sick time, i.e., sick days.
Before one can even being to be categorized as an exempt employee under the “white-collar” exemption, the requirements of—Salary and the routine and regular use of discretion and independent judgment in the performance of their work, must be met. In addition, he or she must perform their exempt work or duties the majority of the time.
If you feel that you have be designated as an exempt employee to avoid being paid overtime and to deny you other benefits and protections granted to non-exempt or hourly employees, you need to talk to an experienced employment attorney. Many employment law claims have a short statute of limitations, which means that you are not entitled to a recovery if you wait too long. The longer you wait the more likely it is you will not be compensated or the amount you are truly owed will be reduced.