CA Employment Law Firm

Misclassification of non-exempt employee

Employee misclassification has rightly been termed “wage theft” because it results in a loss of significant wages to employees. Over several years, such wage theft can deprive a single worker of tens of thousands of dollars.

As a California non-exempt employee, you are protected by state minimum wage, overtime and record-keeping requirements. For example, as of January 1, 2018, California law requires non-exempt employees that work for an employer with 25 or fewer employees to be paid a minimum of $10.50 per hour. Employees that work for an employer with more than 25 employees are entitled to be paid $11.00 per hour. California’s overtime law requires employers to pay non-exempt employees one-and-a-half times their regular hourly rate of pay for all hours worked in excess of 8 in a single workday and 40 in a single workweek and twice their regular hourly rate for all hours worked in excess of 12 in a single workday.

In addition, most employees in California are entitled to an off-duty, 30-minute meal break if they work more than 5 hours a day and a second meal break if they work more than 10 hours a day. Non-exempt employees in California are also entitled to take a paid 10-minute rest period during the middle of each 4-hour work period.

Only certain categories of employees are exempt from California wage and hour laws. The most encompassing exceptions are the so-called “white collar” exemptions for professional, administrative and executive employees. Such employees are exempt from both the minimum wage and overtime provisions of California law. (Labor Code § 515(a); 8 Cal.Code Regs. § 11010 et seq.)

But even if your employer labels your position as “executive” or “administrator” (or pays you a salary) does not mean you are an exempt employee. To be exempt under the “white collar” exemptions, an employee must be primarily engaged (i.e. more than 50% of the time) in duties that meet the test of the particular exemption and customarily and regularly exercise discretion and independent judgment in performing those duties and earn a monthly salary equivalent of no less than two times the state minimum wage for full-time employment.

In addition, certain other employees are exempt from both minimum wage and overtime premium pay. For instance, outside salespersons who regularly work more than half of his/her working time in sales activities outside the workplace are exempt employees. In deciding whether an employee is an outside salesperson, the focus is on the realistic requirements of the job, and not the employer’s job description. It is not clear whether the California outside salesperson exemption applies to a pharmaceutical sales representative who promotes but does not sell the company product.

Additionally, certain employees receiving sales commissions may be exempt from overtime pay requirements if more than half of that employee’s compensation represents commissions and the employee’s earnings exceed one and one-half times the California minimum wage. This exemption applies to “Retail Industry” employees (IWC Wage Order 7) and employees in “Professional, Technical or Clerical Occupations (Wage order 4) not covered by a different Wage Order. To constitute commission wages, the employee must be involved principally in sales activities, and his or her compensation must be a percentage of the price of the product or service. Other wage and hour requirements such as minimum wage, meal and rest breaks and time recording requirements still must be met.

California law provides a separate overtime exemption for truck drivers whose hours of service are regulated by federal law and for drivers transporting hazardous materials within California. The exemption applies, however, only for employees who spend at least some portion of each workday transporting hazardous materials within the state. If they perform other duties, they are entitled to overtime pay for the overtime hours they work.

If you believe you have been misclassified as an exempt employee, we can help. Many of our successful class-action lawsuits involved misclassification of non-exempt employees, including a case where we procured the largest per-person unpaid wages award in California. We are proud of our record of winning over $100 million for our clients who have been misclassified as exempt employees.