In every organization, there are two types of employees: exempt and non-exempt. The former refers to employees who are exempt from minimum wage and overtime pay requirements. Because excluded personnel are paid on a salary rather than by the hour and work in an executive or technical roles, this is the case. Exempt workers are frequently offered year-end bonuses to compensate for the type of work they accomplish as well as any extra effort. For any Labor Law Violations, consult a Los Angeles Employment Lawyer.

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Find A Labor Lawyer for Employment Law Claims in Los Angeles

California labor laws compel most firms to follow standards such as paying overtime, keeping track of hours worked, and providing rest breaks. On the other hand, the Act allows for a number of major exceptions to these prohibitions. In most cases, an employee who is exempt from one or more of these exceptions is referred to as an exempt employee.

What Effect Do Wage and Hour Exceptions Have on Employees?

Compensation for Overtime

Employers must pay most workers an overtime rate of at least one-and-one-half times their normal hourly salary for any hour worked in excess of 40 during a workweek, according to federal law. Otherwise, they would have grounds to hire a LA-based Employment Lawyer for Labor Law violation claims.

Unless the employees are covered by a California wage and hour exception (in which case the two sets of laws are almost equivalent), California law protects workers more than federal law.

California's overtime regulations require businesses to pay one-and-a-half times their regular hourly wage to employees who do not qualify for wage and hour exemptions for:

  • All working hours in excess of 8 in a single weekday
  • All working hours in excess of 40 in a single workweek
  • The worker worked the first eight hours of the workweek for the eighth day in a row.
  • In California, employers are required to pay workers who are not exempt from wage and hour rules twice their standard hourly rate for:
  • All hours worked for more than 12 in a single workday, and all hours worked in excess of 8 on the seventh consecutive weekday of the workweek.

Commissions earned from sales

Any reward connected to your sales is a sales commission, regardless of whether your manager calls it a bonus or something else. In commission arrangements, the prerequisites for receiving the fee and the calculating methodology must be mentioned in writing. If you make a sale and meet all of the terms of your commission contract, you will be paid. The employer cannot change the schedule or claim that the commission plan is flexible after the fact. Even if you left or were fired before the payout date, you may be owed any or all of your profits for sales you completed. Furthermore, as previously stated, some inside salespeople are owed overtime, and in these circumstances, the commission is reflected in your overtime rate.

Tipping. Employees are entitled to their tips, with the exception of automatic gratuities on the bill that the client does not choose. An employer is allowed to pool tips and distribute them to all employees who supplied a service as long as the tip pooling arrangement is fair (in the case of restaurants, this includes cooks and dishwashers). Managers and owners, however, are not permitted to accept tips for themselves. The calculation of the minimum wage excludes tips.

Right to a Meal Break

In California, employees who work more than 5 hours a day (including most wage and hour exceptions) are entitled to an unpaid 30-minute dinner break. A second meal break is required if an employee works more than 10 hours each day.

  • If employees work fewer than 6 hours a day, they can agree (with their employers) to forego the first meal break. They can both agree to waive the second lunch break if they generally work less than 12 hours a day and the first meal break was not waived.
  • The employee must be released of all tasks and allowed to leave the office for his or her meal break. If the employee is expected to remain on the employer's premises or work site during the lunch break, the meal break must be paid for.
  • If an employer/company/business fails to provide a meal break to their employees, they are required to pay an additional one hour of pay at the employee's regular hourly rate. Employees can only be compensated an extra hour every workday if their employer fails to give them missed lunch breaks.

There are certain exceptions to meal breaks, but none of the important exceptions described in this article (those for corporate, management, and technical personnel) apply to meal breaks. If these are violated, you should consult a Los Angeles Employment Law Attorney to be compensated for the violations.

The Right to a Rest break

  • Employees who are not protected by wage and hour exceptions in California are frequently entitled to a paid 10-minute break in the middle of their four-hour shift.
  • An employee is not entitled to a rest day if they work less than 3.5 hours a day.
  • If an employer fails to provide a rest period, the employee is entitled to an additional one hour of pay at his or her regular hourly rate. Employees can only be compensated an additional hour every workday if their employer fails to provide them with a missing rest period.
  • Lactating women who wish to express breast milk for their children must be given reasonable breaks by their employers.
  • Lactation breaks must be rewarded if they are taken during an employee's daily rest break. If they stay longer than or in addition to the customary rest time, they may not need to be rewarded.

Meal and rest breaks, as well as wage statements

Non-exempt employees are entitled to a 30-minute unpaid meal break and a 10-minute paid rest break for every four hours (or any fraction of time over two hours) worked. You can skip the food break if you work less than six hours. It is quite difficult for an employer to waive breaks if you work more than six hours a day. If your employer advises you that a break waiver is in place, you should consult an Los Angeles Labor Law Attorney to see if your rights are being infringed.

Employers are required to furnish non-exempt employees with compensation statements that appropriately indicate the number of hours worked, salary rate, and subsequent pay. If your employer fails to give you a correct pay statement, it may indicate that you are not fairly compensated, and you should seek legal assistance.

Determining whether a worker is eligible for a Wage and Hour Exception

As previously indicated, some workers are entitled to wage and hour exceptions under regulations governing minimum pay, overtime, work hours, and rest periods.

In addition to this three-part exam, there are numerous types of exceptions that relate to certain jobs. The most common job-specific exclusions include Commissioned workers, Hospital staff, Computer Technicians, Private School Teachers, Outside Salespersons, Truck Drivers, and Union Workers.

These exceptions to the norm are subjected to their own tests (distinct from the three-part test mentioned above). But some of them are really only partly exempt from California's wage and hour rules.

Employers can only claim that an exceptional situation exists if an employee "clearly and undeniably" meets the exemption's requirements. If there is any doubt, the employee is normally listed as a regular employee by the law (one that is not subject to a wage and hour exception). In case of misclassification (discussed later), you can hire a California Labor Law Attorney for a claims violating California Employment Laws.

The Requirement for a Minimum Wage

To qualify for a wage and hour exception, an employee must be paid a salary rather than an hourly wage, and the compensation must be at least double the state minimum wage for full-time positions.

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The Definition of the Term "Salary"

A salary is an unchangeable minimum wage for these reasons. Wages for employees must be specified and cannot vary based on the number of hours worked or the quality of the work performed.

Employers can deduct from an employee's compensation for full-day absences and still consider the employee to be compensated on a salary basis, according to the courts. The employee is no longer considered "salaried" if the company deducts for partial-day absenteeism.

If an employee's remuneration is contingent on the number of hours worked with no minimum guarantee, he or she is classified as an hourly employee (and hence not subject to these exclusions).

Calculating the Minimum Salary

As previously stated, in order to be qualified for wage and hour exceptions in California, a full-time employee must be paid approximately double the state minimum wage. For these reasons, full-time employment is defined as 40 hours per week, and the applicable minimum wage is currently determined by the size of the firm.

To meet the minimum payment requirement for excluded workers, multiply the appropriate minimum wage by two and then by 40 hours per week. This means that we'll be paid twice as much each week as the minimum wage.

Importantly, California's minimum wage will increase every year from January 1st until 2023. As a result, California's minimum wage for excluded workers will increase every year. If these are violated, you should get in contact with a Los Angeles Employment Lawyer immediately.

White-Collar Duties Requirement

If the salary requirements are reached, the next stage is to assess if the employee is performing administrative, executive, or technical work, sometimes known as the "white-collar duties" test. To determine whether a person is functioning in an administrative, executive, or professional capacity, you should look at the duties they actually execute, regardless of their job title or how the job is defined in a job description.

For example, the white-collar duties test concentrates on the employee's principal responsibilities. An employee must dedicate more than half of his or her working time to the primary task in order to pass this examination.

Employees who pass this exam are entitled to a number of wage and hour exceptions, including:

  • Overtime pay and access to ten-minute rest periods
  • The right to a living wage is a fundamental human right (as long as they meet the minimum salary requirement, of course).

As a result, it's critical to consider if an individual fits any of the test's requirements.

Employees in the administrative field. An employee is deemed to be working in an administrative capacity if their primary task is an office or nonmanual labor closely associated with the management or general business activity.

An employee's work is related to management or general business operations when they assist in the functioning of a company. Secretaries, sales clerks, bookkeepers, and lead operators on production lines are not included as administrative personnel because they do not assist in the management of the company.

Discretion and Independent Judgment are Required. To qualify as an exempt employee under California's wage and hour requirements, the worker must regularly exercise discretion and unbiased judgment in fulfilling their duties, according to the Labor Code.

An employee is exercising discretion and impartial judgment when he or she makes and implements crucial decisions after analyzing conflicting choices. Even when a higher-ranking employee has the authority to override the choice, an employee's view is unbiased because it is not subject to immediate supervision or advice.

Exceptions for Certain Positions

In addition to the principal exceptions stated above, a few more occupations are subject to exclusions to some or all of California's labor laws.

Employees who are compensated on a commission basis. Employees who are paid via commission in California may be eligible for an overtime exemption. To be eligible for this exception, you must meet the following requirements:

  • The employee that earns more than one-and-a-half times the minimum wage. Commission fees account for over half of a worker's total salary. They operate in either the retail industry or in a professional, technological, or clerical capacity.
  • A salesperson is entitled to commissions as a result of their efforts. In a commission-based contract, the size of an employee's pay is decided by the quantity or value of the item sold.
  • A discretionary payment that such a business could choose to pay or delay, such as a bonus payment, is not a commission, especially if it is computed as a percentage of revenue or earnings.

Physicians and surgeons. Overtime pay rules for licensed doctors and surgeons in California are periodically disregarded. To qualify for this exception, the physician or surgeon must be paid at a certain hourly rate. As their principal responsibility, they engage in activities that required licensure. This exception has a limited application. Medical interns and residents are not eligible. Neither do physicians who are bound by such types of collective bargaining agreements.

Computer Science professionals. Overtime pay is occasionally waived for employees in the computer software sector. To be eligible for this exception, you must meet the following requirements:

  • The employee must devote the majority of his or her time to analytical or creative tasks.
  • The employee's major responsibilities would demand the exercise of discretion and unbiased judgment.
  • It is necessary to have a high level of knowledge in computer systems analysis, programming, or software engineering.
  • Designing or producing computer software or hardware should be one of the employee's key tasks.

Private School Teachers. Many teachers are entitled to a salary and hour exemption under the professional exception noted above. Certain private school teachers are also qualified for a wage and hour exception if they do not fulfill the qualifications. Instead, if they match the following requirements, they will be regarded acceptable:

  • They deal with kindergarteners and students in grades 1 through 12.
  • They earn at least twice the state's minimum pay.
  • They hold a baccalaureate (or higher) degree from an accredited institution of higher learning or meet the requirements for a teaching credential in California or another state.
  • Salespeople who are not employed by the company
  • Outside salespeople are usually exempt from wage and hour requirements.

A person who works as an outside salesperson is defined as follows:

  • Who is above the age of eighteen?
  • Who spends upwards of half of their working day away from the headquarters of their company?
  • Who is the one who sells goods, services, contracts, or the use of a facility?

Commercial vehicle drivers. In California, some truck drivers are exempt from overtime regulations. This restriction does not apply to interstate truck drivers or truckers transporting hazardous commodities. In such circumstances, the drivers' hours are governed by either federal statutes or California's motor vehicle regulations.

Employees who are members of a union. The overtime restrictions in California do not usually apply to union workers. To be eligible for this exception, employees must be covered by a collective bargaining agreement that stipulates their salary, hours of work, and working conditions.

A premium wage scale for all overtime hours worked, as well as a daily hourly rate of pay that is at least 30% greater than the state minimum wage, must be included in the collective bargaining agreement.

There are some exceptions for specialized jobs.

California law is governed in part by a set of wage orders issued by the Industrial Welfare Commission of California. In addition to the aforementioned exceptions, the wage orders have included a slew of new exclusions to California's overtime statutes that apply to employees in specific industries or occupations. The following occupations are subject to special overtime laws:

  1. Full-time employees who work from home
  2. Assistants (personal)
  3. The camp's counselors
  4. Managers of elderly care facilities
  5. Some residential childcare facilities are open around the clock, seven days a week.
  6. Ambulance drivers and attendants
  7. Job opportunities in agriculture
  8. Employer's spouse, child, and parents

Consequences of Misclassification

California courts interpret the above-mentioned exceptions extensively. The employee must adhere to the exemption's requirements in a "clear and unambiguous" manner. The employee should be considered exempt from wage and hour legislation if this is not the case.

The employee is significantly favored under this principle, and the employer carries the legal burden of demonstrating an exception. Employers who fail to treat their employees equitably as required by law may suffer harsh consequences.

Violations of California's Labor Code and Sanctions

Overtime for which there is no remuneration. If a worker works more than eight hours per day, 40 hours per week, or seven days in a row in California, they are entitled to overtime pay. Employers also refuse to pay overtime pay to workers who are incorrectly labeled as exempted.

Employees who have been denied overtime pay owing to a misclassification might pursue a claim for unpaid overtime wages. These costs can quickly build up, even for low-wage workers. Furthermore, the employer could be held accountable for the employee's legal fees and expenses expended in pursuing overtime pay.

In some situations, a penalty per pay period can be applied for breaking California's overtime requirements. The penalty is normally paid to the state of California, although the employee may be able to reclaim up to 25% of it in certain circumstances. Consider one of our prescreened California Attorneys in your Cal Bar Attorney Search.

Missing a rest or lunch interval will result in penalties. Meal breaks and rest intervals are provided to employees who are not exempt. Employers who incorrectly identify their employees as exempt frequently refuse to offer the necessary breaks.

If an employee skips a lunch or rest break, they are entitled to one additional hour of pay at their regular hourly rate.

If an employee misses many rest periods or meal breaks, they will receive up to one hour additional per day for each rest period missed and one hour more per weekday for each meal break missed. As a result, an employee who works a twelve-hour shift without lunch or food breaks is entitled to two extra hours of pay at his or her regular hourly rate.

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Penalties Associated with Paystubs. The employer will be compelled to pay a penalty pay stub penalty to the employee if the employer fails to keep correct records of the employee's employment. The punishment is calculated based on the number of paydays in which the violation occurred.

This penalty is frequently levied when an employee is unsure how much back pay they are entitled because their employer incorrectly classified them as exempt from one or more California labor laws.

Penalties for Waiting Time. An employer who purposefully fails to pay an employee's wages on time as required by the Labor Code may face a waiting time penalty from the court. Employees may be eligible for compensation if they have been denied their full wages as a result of being misclassified under a wage and hour exemption in California.

A late payment, for instance, might result in a penalty of up to 30 days' wages for the employee. Unpaid salaries build up over time, not just on days when the employee worked, but also on days when the employee did not.

Here's What You Can Do If You've Been Misclassified.

Employees who have been wrongly identified as a result of one of the aforementioned exceptions have three choices:

  • Informally address their conflict with their boss, launch a lawsuit, or file a pay claim with the California Division of Labor Standards Enforcement (the "DLSE").
  • The best solution to resolve an exemption issue would be determined by the employee's circumstances. It's always a good idea to get legal guidance before deciding how to proceed.

Employees should be informed, however, that filing a compensation claim or a lawsuit has strict deadlines that must be met.

Deadlines for Submissions of Claims

Employees in California normally have three years to initiate a pay complaint. When the salaries are first legally due, the clock starts ticking. Wages are normally due on the employee's next payday after the pay period in which he or she worked.

When a job is continuous, and the employee is paid on a regular basis (weekly or monthly), a new cause of action emerges on each paycheck, triggering a new statute of limitations.

There are some exceptions. Employees who desire to pursue certain types of litigation may have a shorter deadline. An oral contract violation petition must be filed within two years after the date of the breach.

A statutory damages petition can also have a short timeframe. Despite the lack of clarity in the legislation, certain fines for late salary payments may be subject to a one-year statute of limitations. A three-year statute of limitations, on the other hand, applies to other fines.

Up to four years after it begins to accumulate, you and your L.A. Employment Law Attorney can typically pursue a petition for unpaid pay (but not penalties). To benefit from the lengthier statute of limitations, the employee must launch a case based on a breach of a contractual contract.

Alternatively, the employee could claim that the refusal to pay their salaries was illegal business conduct under California's Unfair Competition Law. This can give an employee access to a four-year statute of limitations, but the remedies are always limited.

Federal Court Cases. Back pay is usually recoverable for overtime compensation earned in the two years prior to submitting a wage claim. The deadline might be extended to three years if the misclassification was willful.

Exempt Employees, Non-exempt Employees, and the Fair Labor Standards Act

The exempt employee category was established by the FLSA, which was passed in 1938. Under the groundbreaking labor legislation, employees are shielded against discriminatory wage practices and workplace rules. While the law has evolved greatly over the last 80 years, it remains one of the most important labor laws in American history, providing guidelines on a variety of employee and employer-related concerns.

The FLSA specifies when workers should expect to be paid and when they should not expect to be paid. When exempt employees work more than 40 hours in a week, they do not receive overtime or time and a half pay. The bare minimum which a company would pay for overtime is time and a half, which is 1.5 times the worker's hourly rate. Any hours done in excess of 40 in a seven-day workweek is considered overtime.

Benefits and Drawbacks of Exempt Employees

The promise of a continuous income is the first benefit of becoming an exempt employee. Exempt employees are paid more than hourly workers and have access to benefits such as IRAs, 401(k) plans, and pensions, as well as incentives, employer-sponsored healthcare plans, and paid vacation and sick days.

You are not eligible for overtime, which is a disadvantage. You may find yourself working long hours to finish an overcrowded job portfolio with little recourse for extra compensation or reprieve from the stress produced by the long hours, depending on your employer's attitude. To put it another way, you're at the mercy of your boss.

What Is Employee Misclassification?

Employee misclassification is a common form of workplace discrimination. To avoid paying overtime, some employers mistakenly identify non-exempt employees as exempt. Another example is misclassifying personnel as contractors or regular employees as "managers."

Although the difference between exempt and non-exempt workers can be difficult to understand, one simple method to illustrate the difference is to evaluate the employer's authority over the employee.

In basic terms, if your supervisor has the ability to tell you what to dress when to come to work, and when to take breaks, you are a non-exempt employee. Unlike an independent contractor, who has a more collaborative connection with their business than a boss-employee one, a non-exempt employee is often eligible for extra pay if they work overtime hours.

If your employer violates these laws, contact us for a referral to the most fitting Los Angeles Employment Law Attorney.

Is it necessary for me to pursue legal action?

If you suspect you were discriminated against for filing complaints about deliberate employment misclassification, it can be difficult to tell whether you may take further action. Because the answer is contingent on a number of factors, it is recommended to seek legal advice from an employment expert before making a decision.

The guidelines governing who is exempt and who is not are fairly clear. These recommendations may differ greatly depending on which group your work role belongs to. The legitimacy of your employee misclassification allegation may be influenced by how these rules are interpreted.

Furthermore, the length of your employment, the pay gap between whatever you were given and what you should've been provided, and the cost of filing a claim must all be taken into account.

It's not uncommon for corporations to lay off staff in today's environment in order to satisfy Wall Street analysts' profits targets. As part of the practice, exempt employees may be compelled to do non-exempt responsibilities that were previously performed by laid-off employees.

A job that once encouraged creativity and innovation might also become unduly regimented and restrictive. In this case, employees may need to be reclassified. Our Los Angeles Employment Law Attorneys will look into the specifics of a job to see if there is a real wage and hour classification issue that needs to be addressed under the FLSA or California overtime rules.

When a huge proportion of workers' rights are infringed, a class-action lawsuit can be filed to bring all of their claims together. Suing your existing boss is difficult, and a class action has many advantages, including the power of numbers. An employer may find it difficult to fire or respond against a group of high-value claims.

Find An Exempt Employee Lawyer in Los Angeles

Has your employer been violating California Labor offers a Free Attorney Referral Service Certified by the California Bar Association that can refer a Los Angeles Employment Law Attorney best fit to handle your case. Contact us through our 24/7 Live Chat (or complete our submission form) for a free initial case review.