SO, YOU THINK YOU’RE AN ADMINISTRATIVELY EXEMPT EMPLOYEE, RIGHT?
By Ward Heinrichs Esq., San Diego Employment Attorney
Exempt employees are employees who are usually paid a minimum required salary and who perform certain duties described in state and/or federal regulations. If an employee’s salary and duties meet those requirements, then the employer does not need to pay overtime or meet other legal obligations that apply to non-exempt employees, such as meal and rest periods.
ON BIG BLEND RADIO: In this episode of Big Blend Radio’s California Employment Law Podcast, San Diego attorney Ward Heinrichs explains what it means to be exempt under California labor law—and what it means for your rights at work. Watch here in the YouTube player or download the episode on Podbean.
The three basic types of exempt employees are those that qualify as Executive (Managerial) Employees, Administrative Employees, or Professional Employees. Of those three, the Administrative Exemption is often the most difficult to apply because it has the most subjective qualifications:
Duties and responsibilities involving either:
– Office or non-manual work “directly related” to the employer’s management policies or general business operations or those policies and procedures of the employer’s customers.
– The administrative functions of a school system or educational establishment or one of its departments or subdivisions engaging in work directly related to its academic instruction or training.
Customarily and regularly exercises discretion and independent judgment on matters of significance.
Must do at least one of the following:
– Regularly and directly assists a proprietor or an employee employed in an executive or administrative capacity.
– Performs, under only general supervision, work along specialized or technical lines requiring special training, experience, or knowledge.
– Executes, under only general supervision, special assignments, and tasks.
Is primarily engaged in duties that meet the administrative test, i.e., the employee spends more than 50 percent of his/her time performing:
– Exempt duties.
– Work that is directly and closely related to exempt work.
– Work properly viewed as a means for executing exempt functions
Meets the salary test, which is 2 times the state minimum wage. The minimum exempt salary is $68,640 (2 x $16.50 x 2080 hours).
The above criteria are based on California law, but the federal criteria are nearly identical. The challenge is to apply all those factors to employees in your business to see if they can meet the above criteria. Common problems with this test include:
– Confusion in applying “exercising discretion and independent judgment” with using skill in applying techniques, procedures, or specific standards.
– Applying the exemption to employees making decisions relating to matters of little significance.
– The exemption is used to classify employees engaged in production aspects of the employer’s business as opposed to administrative functions.
If an employer incorrectly applies the Administration Exemption criteria, then that employer may face large fines and substantial amounts of unpaid wages.
Normally, exempt employees work more than 8 hours a day and/or 40 hours a week. California considers all time worked beyond those limits to be overtime. Further, California considers the salary of misclassified employees to only apply to 40 hours in a workweek. Consequently, if that employee worked more than 40 hours in a week, then California designates those hours as minimum wage violations.
The misclassified employee would also be entitled to meal and rest periods. Additionally, the wage statements (paystubs) will be incorrect, and the misclassified salaried employee probably was not paid on the same paydays as non-exempt employees. All those Labor Code violations can cost an employer substantial amounts of money.
Based in San Diego, California the Employment Law Office of Ward Heinrichs represents both employers and employees in almost all areas of labor law. He and his firm litigate cases that have been filed in many different parts of California. Visit www.BestEmploymentAttorneySanDiego.com
