Some of the most significant class action lawsuits have been filed because many employers have misclassified employees as Exempt Employees when they are not.

Exempt Employees

Many employers think that just because they pay an employee a salary that the employee is now considered an exempt employee and therefore is exempt from overtime.

Another mistake that employers make is calling an employee a manager that the employee is now an exempt employee.  This type of reasoning will not be defendable should a class action lawsuit arise.

So for the purpose of helping employers to understand the difference between exempt and nonexempt employees we have created this Faq.  Employees who are exempt are employees who do not get paid over time.

The Labor Commissioner wants to be sure of two things, number the employee is not be taken advantage of. Number two the when an employer calls or labels an employee as exempt that this employee is really an exempt employee defined by the work and duties that the exempt employee does on a daily basis.

Keep in mind it is not worth the risk to save a few hundred dollars at the sake of misclassifying your employees which in turn could cost several thousand dollars.

Q.Does a job title make an employee exempt?

Absolutely not, simply calling and employee a manager does not make him or her exempt. It makes no difference how impressive the job title may be, the thing that matters is the duties of the employee that is claimed to be exempt.

Q. What does the Labor Commissioner have to say about Exempt Employees?

As stated above it is the duties of the employee that matter. The Labor Commissioner will look at the duties and make the determination of the classification of the employe based on those duties as opposed to a title. If an employee is exempt they will be supervising at least two employees. The Exempt Employee will be spending at least 60% of his time supervising as opposed to non-supervising.

Q. In order for an employee to be exempt are there any salary considerations that employers need to be aware of?

Yes, if an employee is Exempt said employee will make at least double the state minimum wage. Simply paying an employee a salary does not make the employee exempt. Employers also need to be aware of the fact that paying an employee a salary does not lesson compliance with wage and hour laws.

Q. I have heard that  Exempt Employees must be able to use their own discretion and independent judgement, is that true?

Yes that is correct. Another way to say this is that the exempt employee must have hiring and firing capabilities along with be able to make executive decision making ability.  The reason for these requirements is the the Labor Commissioner wants this to be a real position, not just a way for employers to stop paying overtime to their employees.

Q. Can I deduct days taken off during the week if my employee is Exempt?

The answer for the most part is no. Some employers also ask, what if there is no work to do in the shop or on the jobsite. The answer to this is very simple, if the employee is able to work and the employee will be working during the remainder of the week you cannot deduct that day from the employee’s pay. Remember the “Salary Test” each exempt employee must earn double the minimum wage for the state.

Now for a list of California Employee Exemptions

Executive Exemption

This exemption is for those employees who are managers.  But remember simply calling and employee a manager does not make them Exempt.

Administrative Exemption

This exemption covers a wide range of job duties, but just because there are some administrative duties involved in the job description does qualify an employee as an administrative exemption.

Professional Employee Exemption

Although an employee is be deemed a “professional,” there are still qualifiers that must be met before the employer can meet the Professional Employee Exemption status.

Computer Professional Exemption

The California Computer Professional Exemption is now the same as the feds.  For many years California did not have the employee exemption available, but in 2000 that was changed.

Salesperson Exemption

This exemption is broken down into to categories for the purpose of defining exempt versus non-exempt.

  • Outside Sales
  • Inside Sales

Artist

This is an exemption that will seldom be used because most of the employees that fit this exemption will have their own business.

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