Exempt vs. Non-Exempt Status

Exempt vs. Non-Exempt Status

While both state and federal law provides employees with fundamental rights, many of these rights are dependent upon an employee’s status as exempt or non-exempt. In employment law, the term “exempt” refers to whether an employee is exempted from the Fair Labor Standards Act requirements.

The Fair Labor Standards Act (FLSA) is a federal labor law requiring employers to pay a minimum wage, provide overtime pay, among other things. Employees enjoy similar rights under the California Labor Code. However, not all employees are covered under these laws. Employers will try to get around the requirements of the FLSA by claiming that a worker is “exempt.” If an employer is successful, they will not need to pay the worker a minimum wage or overtime pay.

Which Employees Are Exempt Under the FLSA?

Most disputes over an employee’s exempt status arise due to an employer’s refusal to pay an employee for overtime wages. California law provides heartier overtime pay benefits than the FLSA. Under the FLSA, employees are entitled to 1.5x their regular hourly rate of pay for any hours they work over 40 per week. However, under California law, employees are entitled to the following:

• 1.5x an employee’s normal hourly rate if they work more than eight hours a day;
• 1.5x an employee’s normal hourly rate if they work more than 40 hours in a week;
• 2x an employee’s normal hourly rate if they work more than 12 hours in a day; and
• 2x an employee’s normal hourly rate if they work more than eight hours a day working seven or more consecutive days. 

Not all employees are eligible for overtime pay; some are exempt from these requirements. This is because some exempt employees are paid for the job they perform, regardless of the number of hours it takes them. Of course, an employer’s designation of whether a worker is exempt or non-exempt is not legally binding. When it comes to determining exempt versus non-exempt status for the FLSA overtime wage requirements, courts consider the following:

• Salary versus hourly: Is the employee paid a salary? Hourly workers are all non-exempt. However, salaried workers can be either exempt or non-exempt, depending on the remaining factors.
• Minimum salary requirements: A salaried employee will only be considered exempt if paid a salary equivalent to twice the state’s minimum wage.  
• Job duties: To be considered exempt, an employee must spend at least half their time performing exempt job duties.

As noted above, the job-duties test is the focus of many employment disputes. Ordinarily, the higher-level an employee’s position, the more likely they are exempt from FLSA. There are three classifications of exempt employees:

Administrative Employees: Those employees who perform office work or other non-manual work related to the management of a business may be exempt, provided they can use their independent judgment in carrying out their job duties.

Executive Employees: Those employees who perform any of the following may be considered an exempt executive employee:

• Manage of a business or a major department of a company;
• Direct the other of other employees;
• Make hiring and firing decisions; and
• Use their discretion in how they perform the necessary job duties.

Professional Employees: An employee may be exempt as a professional employee if they either among a small group of “recognized professionals” or work in a “learned or artistic profession.” Examples of recognized professionals include:

• Accountants
• Architects
• Doctors
• Engineers
• Lawyers
• Optometrists
• Teachers

A “learned or artistic profession” is a job that requires “advanced knowledge in a science or learning field customarily acquired by a prolonged course of specialized intellectual instruction and study.”

Just because some of an employee’s job duties include those described above does not automatically mean they are not entitled to overtime pay. Employees concerned about their employer’s refusal to pay them overtime wages should reach out to a dedicated San Francisco employment lawyer for assistance.

Discuss Your Situation With an Experienced Bay Area Employment Lawyer

If you have recently been denied the overtime wages, you believe you were entitled to, give the McCormack Law Firm a call. Attorney Bryan McCormack is a dedicated California employment lawyer who helps employees in all types of wage and hour disputes, including those involving overtime pay. For more than two decades, attorney McCormack has held employers accountable for violations of state and federal labor laws. Even if your employer classified you as “exempt,” you may still be entitled to overtime pay. To learn more and schedule a free consultation to speak with an attorney about your situation, call (415) 925-5161.