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Exempt and Non-Exempt Employees: What's the Difference?
All employees should be aware of their status as exempt or non-exempt under the FLSA and California Labor Code.
April 24, 2010 /Human Resources PR News/ -- Exempt and Non-Exempt Employees: What's the Difference?
Whether an employee is classified as exempt or non-exempt under state and federal labor laws can make all the difference in the world. Here's why: non-exempt employees are entitled to certain benefits exempt employees are not, including overtime wages.
Non-Exempt Employees and Overtime Laws
Employers are required by the Fair Labor Standards Act (FLSA) to pay non-exempt employees for the first 40 hours of work in any given workweek at their regular rate of pay. Once a non-exempt employee works more than 40 hours for the workweek, then the employer is required to pay the employee one-and-a-half times their regular rate of pay for each hour over 40.
State law, and particularly California law, trumps federal law whenever it provides greater protections than required federally. In the case of overtime compensation and employment law in general, California law often provides more expansive rights to employees than federal law. Accordingly, employers in the state must comply with the broader protections found under the California Labor Code, particularly when it comes to overtime compensation and exempt and non-exempt status.
Under California law, employers are required to pay non-exempt employees for the first 40 hours of any given workweek at their regular rate of pay, and thereafter at required overtime rates. Non-exempt employees are entitled to receive overtime compensation based not only on the number of hours they work in the workweek, but also based on the number of hours they work each work day. Thus, California law requires employers to pay non-exempt employees overtime at the following rates:
- At one-and-a-half times the regular rate of pay for any hours worked over eight in any given work day or over 40 in any given workweek
- At two times the regular rate of pay for any hours worked over 12 in any given workday
Employees who work seven consecutive days in a workweek also are entitled to overtime compensation at the following rates:
- At one-and-a-half times the regular rate of pay for the first eight hours worked on the seventh consecutive work day in a workweek
- At two times the regular rate of pay for any hours over eight worked on the seventh consecutive work day in a workweek
Exempt Employees
Certain classifications of employees are exempt and thus not entitled to receive overtime compensation under either the FLSA or the California Labor Code. Some of the more common types of employee categories that are listed as exempt under federal and state law include:
- Executive, administrative and professional employees
- Computer software employees
- Managers
- Outside sales employees
- Certain professionals
- Physicians and surgeons
In California, an employee's job duties and time spent carrying out those duties are the most important considerations when determining whether an employee is exempt or non-exempt. The employee's job title alone is not sufficient to make this determination.
For example, just because an employee has "manager" in his or her job title does not mean the employee is automatically exempt. California law requires that managers spend at least 50% of their time performing managerial duties, like directing the work of at least two employees. Additionally, managers must be paid wages at least two times the state minimum wage for full-time employment.
California law also provides a number of exceptions to state overtime rules. For example, employees with alternative workweek schedules, like health care workers, are listed as exceptions. However, just because a category of employees is listed as an exception does not mean they are not entitled to overtime compensation; in many instances, these employees still are entitled to overtime, but it just calculated using a different formula.
Status Misclassification and Your Legal Options
Employers, whether purposefully or by mistake, sometimes misclassify non-exempt employees as exempt and fail to pay them the overtime compensation and other benefits they are owed under state law.
If an employee believes he or she has been misclassified as exempt, the employee either can file a wage claim with the Division of Labor Standards Enforcement or can file a lawsuit against his or her employer.
If the employee no longer works for the employer, the employee also may file a claim for a waiting time penalty. Under California law, employers are expected to pay all wages owed to an employee in a timely manner. When this does not occur based on a willful act by the employer, then the employee may seek a penalty against the employer in addition to the unpaid wages.
For more information on filing a wage claim or lawsuit for unpaid wages, contact an experienced employment law attorney today. In addition to overtime, you may be entitled to other types of compensation. An attorney can review your claim and help you determine the best course of action to take.
Article provided by Marlin and Saltzman, LLP
Visit us at www.marlinandsaltzman.com
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