A common misconception amongst employees is that because they are salaried, they are not entitled to overtime hours. California law requires employers to pay all non-exempt employees overtime – whether they are salaried or hourly. In fact, just because an employer says an employee is exempt does not mean he or she is not entitled to overtime - he or she may just be misclassified and should actually be non-exempt. In addition, job titles do not determine whether an employee is entitled to overtime. Simply calling an employee a supervisor or manager does not make him or her exempt from overtime laws.
This distinction is important because California law requires non-exempt employees to be paid overtime pay at a rate of time and one half for: (1) each hour worked over eight in a single workday; (2) each hour worked over forty in a single workweek, and (3) the first eight hours worked on the seventh day of work in a particular workweek. Including to unpaid overtime, the employee may also be able to recover penalties for, among other things, missed meal and rest breaks and inaccurate pay stubs.
California law allows for several exemptions from overtime. However, each exemption is fact specific and requires employers to satisfy a compensation and duties test. Below are two of the more common exemptions.
California Executive, Administrative and Professional Employees
To qualify under this exemption, employees must meet all the following requirements:
- (1) Earn a monthly salary equivalent to no less than two times the minimum wage for full-time employment.
- (2) Have duties and responsibilities that involve either:
- the performance of office or non-manual work directly related to management policies or general business operations of his or her employer or his or her employer's customers, OR
- the performance of functions in the administration of a school system, or educational establishment or institution, or of a department or subdivision thereof, in work directly related to the academic instruction or training carried on therein.
- (3) Customarily and regularly exercise discretion and independent judgment.
- (4) Meet any of the following:
- Regularly and directly assist a proprietor, or an employee employed in a bona fide executive or administrative capacity; OR
- Performs, under only general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; OR
- Executes, under only general supervision, special assignments and tasks.
- (5) Be primarily engaged in duties, which meet the test for the exemption.
California Computer Software Exemption
To qualify under this exemption, employees must:
- (1) earn a minimum hourly wage or minimum annual salary (in 2017: $42.53/hour or $88,231.36 per year; in 2018: $43.58/hour or $90,790.07 per year);
- (2) be primarily engaged in work that is intellectual or creative and that requires the exercise of discretion and independent judgment.
- (3) be primarily engaged in duties the consist of one or more of the following:
- (a) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications.
- (b) The design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to, user or system design specifications.
- (c) The documentation, testing, creation, or modification of computer programs related to the design of software or hardware for computer operating systems.
- (4) be highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, or software engineering.
Importantly, this exemption cannot apply to an employee if any of the following apply:
- The employee is a trainee or employee in an entry-level position who is learning to become proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering.
- The employee is in a computer-related occupation but has not attained the level of skill and expertise necessary to work independently and without close supervision.
- The employee is engaged in the operation of computers or in the manufacture, repair, or maintenance of computer hardware and related equipment.
- The employee is an engineer, drafter, machinist, or other professional whose work is highly dependent upon or facilitated by the use of computers and computer software programs and who is skilled in computer-aided design software, including CAD/CAM, but who is not in a computer systems analysis or programming occupation.
- The employee is a writer engaged in writing material, including box labels, product descriptions, documentation, promotional material, setup and installation instructions, and other similar written information, either for print or for onscreen media or who writes or provides content material intended to be read by customers, subscribers, or visitors to computer-related media such as the World Wide Web or CD-ROMS.
- The employee is engaged in any of the activities set forth in nos. 1 through 4 above for the purpose of creating imagery for effect used in the motion picture, television, or theatrical industry.
These are just some of the exemptions available under California law. If you feel you have been misclassified and may be entitled to overtime, call one of our attorneys.