Exempt Non-exempt Misclassification

EXEMPT STATUS

Employees that are classified as “exempt” are not entitled to overtime pay. But most employees should not be classified “exempt” and should be entitled to overtime pay, which is 1.5 times the regular pay rate when employees work between 8-12 hours a day or over 40 hours a week or double the regular pay rate when employees work over 12 hours a day or on the seventh straight day during a workweek.

MISCLASSIFICATION

Employers often avoid paying overtime by misclassifying employees as exempt. They accomplish this by giving employees a meaningless “management” or “supervisor” title and paying them a salary. But the process for determining whether an employee can be classified as exempt is more complicated.

DETERMINING EXEMPT STATUS

Generally speaking, employees may be classified as exempt if they fall under the below categories and meet certain requirements:

  • ⇒ Executives
  • ⇒ Administrators
  • ⇒ Professionals
  • ⇒ Outside Sale Persons
  • ⇒ Inside Sales Persons
  • ⇒ Computer Professionals

EXECUTIVE EXEMPTION

Employers usually use the executive exemption to misclassify managers, assistant managers, and supervisors. Despite job titles, this exemption is strictly limited to employees who:

⇒ Manage and are in charge of an enterprise, department or subdivision. This does not apply to employees who only supervise a few employees or help with management responsibilities

⇒ Regularly direct the work of two or more employees

⇒ Have the authority to hire and fire others or whose suggestions and recommendations as to the hiring, firing, or advancement of others are given great weight

⇒ Regularly exercise discretion and independent judgment

⇒ Spend more than 50% of their work time on management-type duties

⇒ Earn a monthly salary of no less than two times the state minimum wage (approximately $2,880 per month)

ADMINISTRATIVE EXEMPTION

The administration exemption is limited to employees who:

⇒ Perform office or non-manual work that is directly related to management policies or general business operations

⇒ Regularly exercise discretion and independent judgment

⇒ Regularly and directly:

Assist executives, high-level administrators, and upper management or

Perform specialized or technical work that requires special training, experience, or knowledge with only general supervision or

Execute special assignments and tasks with little supervision

⇒ Spend more than 50% of their work time on administrative-type tasks

⇒ Earn a monthly salary of no less than two times the state minimum wage (approximately $2,880 per month)

PROFESSIONAL EXEMPTION

The professional exemption is limited to professionals who:

⇒ Are licensed or certified by the State of California in law, medicine, dentistry, optometry, architecture, engineering, teaching or accounting or

⇒ Spend more than 50% of their work time engaging in work that:

Requires specialized knowledge gained through advanced study or

Is original and creative in a recognized field of artistic endeavors, such as music, writing, theater, and graphic arts (as opposed to work by anyone with general knowledge or training) and

Is predominantly intellectual and varied in character (as opposed to routine mental, manual, mechanical, or physical work)

⇒ Regularly exercise a high degree of discretion and independent judgment

⇒ Earn a monthly salary of no less than two times the state minimum wage (approximately $2,880 per month)

This exemption does not apply to pharmacists practicing pharmacy or registered nurses engaged in nursing, unless they individually meet the requirements under the executive or administrative exemptions.

OUTSIDE SALES EXEMPTION

The outside sales exemption is limited to employees who regularly spend more than 50% of their work time away from their employer’s place of business selling items or obtaining orders or contracts.

But this exemption does not apply to employees who make sales via mail, telephone or the Internet, unless the sale was part of in-person visits with clients.

And this exemption does not apply to employees who work from home. If employees work from home, they only qualify under this exemption if their spend more than 50% of their working time away from their home selling items or obtaining orders or contracts.

INSIDE SALES EXEMPTION

This exemption is limited to employees who work in sales and meet the below requirements:

⇒ Earn at least $13.50 per hour (1.5 times the state minimum wage)

⇒ Earn more than half of their weekly income from commissions

COMPUTER PROFESSIONAL EXEMPTION

The computer professional exemption is limited to professionals in the computer field who:

⇒ Spend more than 50% of their work time on intellectual or creative tasks that require discretion and independent judgment

⇒ Spend more than 50% of their work time on tasks that involve either:

Systems analysis

Developing, designing, documenting, analyzing, testing or modifying computer systems or programs

Documenting, testing, creating, or modifying computer programs related to software design or hardware for operating systems

⇒ Are highly skilled and proficient in applying highly specialized information to computer systems analysis, programming, and software engineering

⇒ Are currently paid at least $38.89 per hour

But the exemption does not apply to computer professionals who either:

⇒ Are trainees or hold entry-level positions

⇒ Have not attained the level of skill and expertise necessary to work independently and without close supervision

⇒ Are computer operators, manufacturers, and repairers

⇒ Are engineers, drafters, machinists, or other professionals may be skilled in computer-aided design software, including CAD/CAM, but who are not in a computer systems analysis or programming occupation.

⇒ Write material for print, onscreen media, customers, subscribers, or visitors to computer-related media such as the World Wide Web or CD-ROMS. This type of material includes box labels, product descriptions, documentation, promotional material, setup and installation instructions, and other similar things

⇒ Create imagery for effect used in the motion picture, television, or theatrical industry

SEEK CONSULTATION

If you feel that you have been misclassified, contact us for a free consultation.