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Overtime for Salaried/Exempt Workers

Employers in California are expected by law to follow specific rules about how they treat their employees. There are, for instance, set guidelines on how overtime should be paid, how working hours should be tracked, and how employees should be provided for rest and meal breaks. There are, however, specific jobs that are exempted from these requirements.

If you are an exempt employee, some form of wage and hour laws do not apply to you. An Orange County Workers Compensation Attorney can help you understand more about overtime for salaried/exempt employees and whether or not you should pursue compensation for unpaid overtime.


California Exempt Vs. Non-exempt Employees

Employees in the state of California are mainly divided into exempt and non-exempt employees. The non-exempt employees, according to California law, have more employment rights than exempt employees. There are statutes set by the California Labor Code that employers are required to follow, which include payment of overtime and provision of rest breaks to their employees. Certain types of professions are exempted from these regulations. Those employees who take up those jobs are the ones referred to as exempt employees.

Exempt employees are therefore defined as workers whose occupation is not included in one or all of the set hour and wage rules provided under California Laws. How can a person tell whether she/he is an exempt or non-exempt employee? There are three main factors, as follows:

  • Exempt employees have a higher minimum wage: The law requires exempt employees to be compensated a minimum wage that is twice more than the minimum wage requirement by the state for a full-time employee on the minimum
  • Performance of white-collar jobs: The responsibilities of exempt employees are primarily white-collar, which means that they are mainly executives, administrators, and professionals
  • Exempt employees are allowed to use independent judgment: In the performance of their duties: they do not work under any supervision, and their responsibilities must involve the use of total or partial discretion as well as independent judgment.

The three factors must be fully met for an employee to be categorized as exempt, which means that they are excluded from receiving overtime, a minimum wage, plus rest breaks. Note that requirements for meal breaks are a must for all employees, including exempt employees.

Employers do not follow the required criteria in classifying employees, though. That is why you will find some exempt employees who cannot meet the three requirements above. Some workers are classified as exempt, but they are not entirely exempt. What this means is that these employees are only protected by specific labor laws and not all the rules.


Non-exempt Employees Enjoy the following Rights:

  • Rights to overtime payment: The Federal law provides that employers must pay employees for working overtime at a rate of 1.5 times their standard hourly rate as a minimum. In California, overtime laws are even more favorable since those that work for more than 12 hours of overtime in a day are supposed to be paid at a rate of twice their standard hourly rate.
  • Rights to rest breaks: all workers in California are eligible for at least 30 minutes of meal break for every five hours they work. If an employer does not provide a meal-break even for exempt employees, they are supposed to pay them for the time they worked when they were supposed to be on break.

Non-exempt employees are entitled to 10 minutes of rest break for every four hours that they work.

  • Rights to wages: according to the Federal Law, non-exempt employees are supposed to be paid a minimum hourly wage of at least $7.25. In California, a non-exempt employee working for an employer who has fewer than 25 employees should be remunerated a minimum hourly wage of $10.50. Those who work for employers with 25 employees and more should receive $11.00 on the minimum per hour as compensation.

Other than meal breaks, exempt employees are not entitled to the same rights enjoyed by non-exempt employees. Some of the professions that fall under the category of exempt employees include:

  • Commissioned employees
  • Union employees
  • Surgeons and physicians
  • Truck drivers
  • Teachers in private schools
  • Computer professionals
  • Outside salespersons

Note that some of these professionals are partially-exempt. What this means is that employers cannot exclude them from some of the non-exempt rights listed above. The law only allows employers to claim that an employee is exempt if they unmistakably and plainly meet the standards set for the exclusion. If you are partially-exempt, the law will only recognize you as non-exempt, and this means that you are entitled to all the rights of non-exempt employees.


California Overtime Exemptions

As mentioned above, an exempt employee is the one whom some of the critical California wage/hour rules will not apply. These include overtime rules. For non-exempt employees, things are more relaxed because their overtime requirements are provided under the state's wage/hour laws. The same regulations provide that non-exempt employees be paid for every rest and meal break that they work. Since exempt employees are well-paid, with the law requiring them to earn twice the state's minimum wage on the minimum, the law does not see the need to provide payment of overtime for them. Besides, most of them work independently.

However, some employees are listed as exempt, yet they are not entirely exempt. The law is well-aware of this. To protect such employees whose rights have been denied under the guise of being listed under exempt, California laws allow such employees to file a lawsuit against their employees for all the extra hours, they have worked and all the rest and meal breaks they have lost.

Note that your employer cannot list you as an exempt employee through the following:

  • Making you sign an agreement, which classifies you as an exempt employee
  • Paying you wages that are more than the standard hourly wage

If you are receiving a higher salary than the standard minimum wage, and you are a professional, yet you are not allowed to perform your duties independently, you still do not meet the requirements to be an exempt worker.


California White-Collar Exemption

The most important and most significant category of exempt employees in the state of California is the administrators, executives, and professional workers. Their exclusion to overtime requirements is what is sometimes referred to as white-collar exemption. To be exempted from hour/wage laws while working under this classification, a worker must satisfy the following:

  • Their main tasks should revolve around administrative, professional, or executive duties. This should account for at least 50% of their duties
  • They should customarily or regularly be able to exercise discretion at work or independent judgment
  • They should earn pay equal to, as a minimum, two times the minimum wage requirement for a full-time employee in the state who is working 40 hours in a week

The minimum salary requirement for an exempt employee in California as of January this year, which will allow them to enjoy the white-collar exclusion is $45,760 for an employee working for a company with fewer than 26 employees. Note that being paid such salary and working in an office setting does not qualify you as an exempt worker under this classification.

In the case of registered nurses, for instance, they are not categorized as exempt employees. What this means is that overtime plus hourly-wage rules govern them, except in cases where a registered nurse is primarily involved in administrative or executive tasks and can meet all the other requirements for the white-collar exception.

Other than the categories listed above, there are individual professionals that California law has indicated that they are also excluded from overtime laws. These are, for instance:


Computer Software Specialists

These are some of the professionals that have been excluded from overtime/wage-hour regulations by the California Labor Laws. The exemption, in this case, affects all workers who specialize mainly in hardware and software designs, analysis of computer systems, program or computer system design and development. They, however, have to meet the following requirements:

  • That they are mainly engaged in creative or intellectual work that calls for some freedom and autonomous judgment in its execution
  • That they possess high levels of skills and proficiency in the use of specialized info to the analysis of computer systems, software, and programming engineering
  • That they earn an hourly wage of $45.41 on the minimum or a yearly salary of $94,603.25, paid monthly

A computer software specialist will not be considered exempt employee if they are:

  • Entry-level workers or trainees who are still learning how to use highly-specialized data in the computer field
  • Mere employees who haven’t acquired any special skills or expertise to be able to work with minimal or no supervision
  • Employees whose main job is operating computers, or manufacture, maintenance, and repair of computer hardware
  • Simple workers who are drafters or engineers and whose main area of specialization is in the creation of computer-assisted designs and not in programming or analysis of computer systems
  • Writers whose primary work is to provide content that is connected to computers and computer software
  • Workers who deal with a high level of computer systems programming or analysis but only to create imagery and effects for TV and theater production or creation of movies


Surgeons and Doctors

Surgeons and doctors are another category of professionals who are excluded from California overtime laws. They include licensed surgeons and physicians whose job requirements call for licensing. However, the exemption, in this case, will not affect interns, residents or surgeons/physicians who are covered under a collective bargaining agreement.

To satisfy the state’s requirements on wage/hour exemption as a doctor or surgeon, you must be earning an hourly wage of $82.72 as a minimum or an equivalent salary for a full-time doctor/surgeon.


School Teachers in the Private Sector

This is a class or professionals that are not eligible for California overtime laws. If you teach in a private school, you are eligible for wage or hour laws exemption under the following circumstances:

  • That your main tasks revolve around educating your students
  • You regularly and customarily exercise independent judgment and discretion in the course of your duty
  • That you have at least a Bachelor’s degree or a higher qualification or valid teaching qualifications from a recognized college/university

An overtime exemption for teachers in private schools will only apply if the teachers earn more than the following:

  • More than 100% of what California school districts offer the least paid credentialed teachers
  • More than 70% of the least salary received by credentialed teachers paid by a school district in the county or city where the private institution is located.


Employees working for California Government or The University of California

Again, the state's overtime laws and wage laws do not affect state workers or those that work for local governments. Similarly, all employees working for the University of California are exempted from overtime laws as provided by the state's constitution.


California Exemption for Workers Earning Commissions

There is also an exemption to wage and time and laws for workers who:

  • Are paid more than the minimum wage by at least one or one-and-a-half times
  • Those who make more than 50% of their wages from commissions

All these and many other employees in the state of California are not included in the state's overtime laws. California overtime statutes mainly cover non-exempt employees who work more than eight hours every working day, those that work more than forty hours in a week and those that work at least six days a week. The law requires employers to pay employees for the hours they work in excess form those that have been listed here. However, if you fully qualify as an exempt worker, your employer will not be required to compensate you for the extra time you put in your work.


But is There Overtime for Salaried/Exempt Workers?

Yes. As mentioned above, many employers misclassify their employees as exempt employees so as not to pay them for every extra hour they put in their work or even to avoid meeting other requirements of California Labor Laws. So many employees are missing out on the benefits they should be enjoying as non-exempt employees, while in the real sense, they are not exempt.

Some employers assume that just because they are paying their employee salaries, or since they have provided them with a desk job, these employees are exempt and will, therefore, not be covered under the hour and wage laws. Other employers compel their employees to sign a job contract assenting to be listed as exempt and, therefore, not qualified to receive overtime payments. Later on, the same employees are assigned substantial amounts of work outside their working hours.


What to Do if You Have been Wrongly Classified as Exempt

California Labor Laws are very clear, and thus, none of those employees above qualifies as exempt workers. If you feel that your employer misclassified you as an exempt employee while in actual sense you are operating as a non-exempt employee, it is time to seek the help of a legal professional. The right workers' compensation attorney will help you bring a wage or hour lawsuit against your employer to help you collect the overtime compensation your employer failed to pay you for the extra time you invested in your work.

Your attorney will help you determine whether or not you unmistakably meet the set standard for overtime exemption. If not, you should automatically be categorized under non-exempt employees. This standard is designed to favor the worker, and for that reason, the burden of proof will fall on the employer, to demonstrate that the employee was indeed exempt from the labor laws requirements.


Consequences for Misclassifying Employees

It is good to note that when employers do not adhere to the law requirements of treating non-exempt employees as so, the effects can be grave. Some of the penalties provided for violating California Labor Code are as follows:

Mandatory Payment of Unpaid Overtime

State laws demand non-exempt employees to be paid full wages for the extra hours they work. When you have been misclassified as exempt, and your employer fails to pay you overtime wages, he/she can be compelled by the court to pay you for all the unpaid overtime. With the help of your attorney, you can calculate your back-pay for all the unpaid overtime to determine the amount of money you should pursue as compensation. This could translate to a lot of money, even for an employee who earns a small amount of money.

Additionally, your employer will be required to cater for all the legal costs, including your attorney charges which you have incurred in pursuing compensation for the unpaid overtime wages. Some cases attract a penalty of between $100 and $200 every day for the length of time in which the employer violated overtime laws. Though the penalty is paid to the state, an employee may be able to claim 25% of it.

Penalties for Denied Rest and Meal Breaks

Again, non-exempt employees in California should be allowed to rest and meal breaks as provided under the state's labor laws. Employers who have misclassified their workers as exempt will also have failed to give them rest and meal breaks as expected. In that case, an employee can pursue compensation for the lost rest and meal breaks. In this case, the employer will be required to pay for an extra hour for every day an employee has missed their meal or rest break.

If, for instance, an employee has missed a couple of rest and meal breaks, they will be eligible for an extra hour per working day for all the missed rest breaks and another extra hour for all the meal breaks they missed. If you worked a full shift of 12 hours without any rest break or meal break, you should be paid two hours extra every day for all the days you worked the same shift with no rest and meal breaks.

Pay Stub Consequences

This penalty applies to an employer who has failed to maintain proper accounts of his/her employee's work. Without correct documents, it may not be possible to get the actual amount the employer is required to pay the worker for unpaid overtime. In that case, the law will set an amount to be paid as a pay stub, depending on the number of days the violation took. California’s first pay stub violation is payable by about $50 in penalties. The employee will then be entitled to a payment of $100 for every pay period that the labor law was violated. The maximum penalty payment is usually $4,000. 

Penalties for the Waiting Period

If the court has reason to believe that the employer willfully failed to pay an employer the overtime wages promptly as required by the state's Labor Laws, the employer may be subjected to another penalty called the waiting period penalty. Many employees who have been denied of their entire overtime pay because they were classified wrongly as exempt workers are entitled to this pay.

A delay in payment of an employee’s wages can attract a penalty that is equal to that employee’s 30-days’ pay. Note that unpaid overtime wages will accumulate daily, and not only for the time the worker was on duty but also for the non-working days as well.


Find an Employment Attorney Near Me

Many employees today are missing out on some of the benefits they are entitled to because their employers have misclassified them as exempt workers. An experienced workers' compensation attorney knows this too well and will help you establish whether or not you are exempt or non-exempt, and whether you have been paid fully for all the hours and days you have worked. If not, they will help you resolve the matter informally with your employer or file a claim in court for compensation. If, therefore, you feel that your non-exempt rights have been infringed upon, call us at 949-423-3212. The Orange County Workers Compensation Attorney will take you through the process and ensure that you get the compensation you deserve.


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