Exempt v. Non-Exempt Employee in California

When you are hired by an employer as a regular employee, depending on your job duties you will be classified as either an exempt employee or non-exempt employee.  The primary difference between an exempt employee and a non-exempt employee is that an exempt employee is not paid overtime nor is the employer required to give the employee rest periods and scheduled lunch periods.  Instead, an exempt employee is paid a salary regardless of the amount of hours the employee works in a day, week or month.  Accordingly, the “exempt” in exempt employee references the fact that this type of employee is exempt from certain California labor laws.

Now, simply because your employer labels you as an exempt employee does not necessarily mean that you are not entitled to overtime, lunch periods or rest breaks.  Under California law, only certain types of employees may be classified as exempt employees.  More specifically, it does not matter what the employee’s job title is, it is the responsibilities of the employee that will determine whether or not the employee is classified as exempt or non-exempt.

The regulations setting forth what jobs are exempt from overtime are in Wage Orders set forth by the California Industrial Welfare Commission. The California Department of Industrial Relations (“DIR”) set forth specific jobs that are classified as exempt, such as outside sales, airline employees and full-time carnival workers.  If you job duties fall within one of the specific jobs listed by the DIR, then you may be classified as an exempt employee.  Keep in mind, if you could be classified as an exempt employee that does not necessarily mean that you must be an exempt employee.  Your employer may still pay you hourly, even if you could be classified as exempt.

Besides taxi cab drivers, other employees that are considered to be exempt are white collar employees.  In order to be considered a white collar employee the employee must perform work that is (1) executive, (2) administrative or (3) professional.

Executive Employee

A person is considered an executive if his or her duties involve the management of the company they work for.  The executive must also regularly direct the work of two or more employees.  Simply providing guidance on occasion will likely indicate that the employee does not have control over other employees.  In addition, the executive must have the authority to hire or fire employees.  If an executive does not have this control in the company, s/he’s opinion on hiring and firing must be given great weight in order to show that the employee is in fact an executive.

Administrative Employee

An administrative employee may be exempt from California labor laws if the administrator performs office or non-manual work.  An administrator duties should be directly related to management policies or general business operations.  An administrator must meet one of the following three elements in order to be exempt.  They are as follows:

  1. Regularly and directly assist an executive or another administrator;  or
  2. Perform specialized or technical work that requires special training, experience, or knowledge under only general supervision; or
  3. Execute special assignments and tasks under only general supervision.

Administrators are going to be considered exempt if their duties directly relate to management policies or general business operations.

Professional Employee

A professional employee is one that is engaged in a job that requires a license or certification issued by the State of California. Professionals include lawyers, doctors, teachers, dentists, architects, engineers, teachers and accountants.

Salary Requirements

In addition to meeting certain job responsibilities, an exempt employee must also be paid a minimum salary based on California’s minimum wage.  To meet the salary basis test for exempt status, an employee must earn a monthly salary that is NOT less than two times California’s minimum wage for full-time employment, which is defined as 40 hours per week.  As of September 2016, the state minimum wage is $10/hour, which means that a salaried employee must be paid a minimum of $41,600 yearly.  Doing the math, the monthly minimum salary is approximately $3,466.67 ($20 per hour (double the state minimum wage) x 40 hours per week x 52 weeks per year, divided by 12 months per year = a monthly salary of $3,466.67) or $41,600 annually.

If you believe that you are a misclassified employee, contact the attorneys at The Rinka Law Firm at 310-556-9653.

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