Overtime for Salary Employees: The Misclassification Problem

Many employers have classified certain of their employees as exempt from the overtime provisions of the California Labor Code.  However, an employer’s designation is not the determining factor as to whether that employee is entitled to overtime pay.  First the exempt employee’s salary must be at least twice the minimum wage.  Second, the employee will only be properly exempt if their duties qualify for exempt status and only if they spend more that 50% of their time performing exempt duties.

Executive Exemption

If an employee spends more than 50% of their time managing the business, meaning they exercise discretion and independent judgment, direct the work of more than one other employee, and they can hire and fire and promote employees, they may qualify for the executive exemption.

Professional Exemption

The professional exemption is for those employees who are licensed or certified by the State of California and primarily engaged in the practice of
law, medicine, dentistry, optometry, architecture, teaching, accounting or in a “learned” or “artistic” profession.

Administrative Exemption

This is where a lot of the trouble is. An employee may qualify for this exemption if they perform office work or non-manual work that is directly related to managing the business.  The employee must exercise discretion and independent judgment on a regular basis.  This exemption also includes a worker who performs, under only general supervision, work along specialized or technical lines requiring special training, experience, or knowledge.  These workers must be primarily engaged in duties which meet the test for the exemption.

If you have been misclassifed, you may be entitled to back overtime, call the attorneys at George Bean Law at 714-904-9338.

From the California DLSE

Following are examples of employees who might qualify for the administrative exemption:

  1. Employees who regularly and directly assist a proprietor or exempt executive or administrator. Included in this category are those executive assistants and administrative assistants to whom executives or high-level administrators have delegated part of their discretionary powers. Generally, such assistants are found in large establishments where the official assisted has duties of such scope and which require so much attention that the work of personal scrutiny, correspondence and interviews must be delegated.
  2. Employees who perform, only under general supervision, work along specialized or technical lines requiring special training, experience or knowledge. Such employees are often described as “staff employees,” or functional, rather than department heads. They include employees who act as advisory specialists to management, or to the employer’s customers. Typical examples are tax experts, insurance experts, sales research experts, wage rate analysts, foreign exchange consultants, and statisticians.
  3. Employees who perform special assignments under only general supervision. Often, such employees perform their work away from the employer’s place of business. Typical titles of such persons are buyers, field representatives, and location managers for motion picture companies.

Perhaps the most common misapplication is the application of the exemption to employees engaged in production aspects of the employer’s business as opposed to administrative functions.

Caveat. As with any of the exemptions, job titles reflecting administrative classifications alone may not reflect actual job duties and therefore, are of no assistance in determining exempt or nonexempt status. The fact that an employee may have one of the job titles listed above is, in and of itself, of no consequence. The actual determination of exempt or nonexempt status must be based on the nature of the actual work performed by the individual employee.

Employers have often misclassified clerks and secretaries and have later been subject to lawsuits for unpaid overtime and the penalties that come with that.  If you have been misclassifed, you may be entitled to back overtime, call the attorneys at George Bean Law at 714-904-9338.

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