The Exempt And Non-Exempt Employee Classification in California
An employee can be either exempt or non-exempt. Categorizing an employee as exempt or non-exempt under the California State law and the federal wage and hour law has important consequences and is an influential decision.
The Importance Of The Exempt Vs Non-exempt ClassificationThe law presumes that all employees are non-exempt from the requirements in the Labor Code, for example, those for minimum wage, overtime pay, meal and rest breaks. Non-exempt employees are excepted from certain requirements due to their pay and duties. The burden to classify an employee as exempt rests on the employer. It is an important decision and the employer should seek the advice of an experienced lawyer.
Serious class action lawsuits resulted from an employer mis-classifying non-exempt employees as exempt from California law requirements. Compared with the federal law, the California state law has more severe standards. However, where there is no conflict between California law and the federal law, the federal regulations can be used.
What Is The Difference Between Exempt And Non-Exempt Employees?Exempt employees are excepted from the essential hour and wage requirements, especially the one regarding overtime. Typically, exempt employees are professionals or managers. Non-exempt employees are not excepted from overtime laws and other relevant regulations about wage and hour, for example, the ones about rest periods. Commonly, non-exempt employees are non-managerial employees, hourly paid. A non-exempt employee must be paid overtime if he or she works more than eight hours a day.
What Determines The Exempt Or Non-Exempt Status?A job title cannot determine the exempt or non-exempt status. The job title could be impressive but the actual duties could not meet the demands for exemption.
The distinction between exempt or non-exempt status can be made by the California Labor Commissioner by examining what work the employee performs.
Essential in determining the status of employees are their compensations and their duties. The minimum wage in California is 10$/hour. For an exempt employee, the legal demand is to earn a monthly salary equal to no less than two times the minimum wage for full-time. This works out a minimum monthly salary of around $3,466.
In exemption analysis, the focus is directed at examining the nature and quantity of the duties performed by the employee. Moreover, very relevant for an exempt status is the discretion and independent judgment exercised regularly and customary by such employees. Independent judgment and discretion require investigating and judging probable courses of action and taking decisions on the basis of this determination.
We have presented general guidelines; the standards to determine an employee's status are very technical and require thorough investigation.
The California Exemptions For EmployeesThe most important exemptions available in California are the executive, administrative, professional employee, and computer professional exemptions.
The executive exemption is applied to managers. However, all the requirements detailed above have to exist for the exemption to be correct.
The administrative exemption applies to employees that have administrative powers and operate autonomously, with little guidance.
To qualify for the professional exemption, specific demands have to be met. Usually, those exempted are attorneys, physicians, and other licensed professionals.
The computer professional exemption did not exist in California until 2000 when the law was amended to establish an overtime exemption for this category of employees.