California Overtime Rules: Who Gets It And Who’s Exempt?

California Overtime Rules: Who Gets It And Who’s Exempt?

Employees in California who are “non-exempt” are entitled to overtime pay for time worked over 8 hours in a day or 40 hours in a week. This is true unless the employer has adopted an “alternative workweek” schedule in which employees work normal hours of 10 hours per day, 4 days per week.

Overtime – Employees are entitled to overtime of 1.5 times their regular rate of pay for time worked over 8 hours in a day or 40 hours in a week. All time worked on the 7th consecutive day of work must also be paid at the overtime rate.

Double time – Employees are entitled to double time – twice their regular pay rate – for time worked over 12 hours in a day or over 8 hours on the 7th consecutive day of work.

I’m Paid a Salary, Am I Entitled to Overtime?

The most common misconception about the overtime laws is that employees who are paid a salary are exempt from overtime.

The truth is that overtime exemption rules are complicated. Just because you are paid a salary doesn’t mean you aren’t entitled to overtime. You are still entitled to overtime unless all of the requirements for an exemption apply to you. If are paid a salary, but think you may still be entitled to overtime, you should contact an employment lawyer who can help determine whether you are actually exempt, and if not, recover unpaid overtime pay from your employer.

What Does “Exempt” Mean?

Exempt employees satisfy the requirements of an exemption from the overtime rules. Exempt employees are not entitled overtime and are also exempt from other protections that apply to non-exempt employees. Some of the protections that apply to non-exempt employees that don’t apply to exempt employees are:

• Overtime pay
• Minimum wage requirements
• Reporting time pay
• The requirement that the employer maintain records concerning hours the employee works
• The requirement that the employer furnish any uniform the employee is required to wear
• Meal and rest breaks

Employers often misclassify employees as exempt to avoid paying overtime and complying with other wage and hour requirements, such as providing meal and rest breaks.

Common Exemptions from Overtime

To be exempt from the overtime rules, an employee must meet ALL of the requirements of one of the exemptions. The most common exemptions are the Executive Exemption, the Administrative Exemption, and the Professional Exemption.

The Executive Exemption

To fall within the executive exemption means it means that:

1. Your duties involve the management of the business or a recognized department or subdivision of the business; AND
2. You customarily and regularly direct the work of two or more other employees; AND
3. You have the authority to hire or fire other employees or your suggestions and recommendations concerning the hiring and firing and advancement and promotion of other employees is given particular weight; AND
4. You customarily and regularly exercise discretion and judgment in your job; AND
5. You are primarily engaged in duties that meet the test of the exemption (meaning that more than ½ of your work time is spent performing executive functions); AND
6. You earn a monthly salary at least 2 times the minimum wage ($3,200 in 2016).

Notice that for the Executive Exemption to apply, you must meet ALL 6 requirements. If one requirement is not met, you are not exempt and are entitled to overtime.

The Administrative Exemption

The administrative exemption applies to teachers, school administrators, assistants to high-level executives, and some employees who perform technical or specialized work requiring special training, experience or knowledge, such as tax experts, insurance experts, sales research experts, wage rate analysts, foreign exchange consultants, and statisticians, but only if they exercise substantial discretion and independent judgment.

To meet the Administrative Exemption, it means that:

1. Your duties involve either: (a) non-manual work directly related to management policies or general business operations of the employer or of customers; OR (b) administration of a school system, school or teaching; AND
2. You regularly exercise discretion and independent judgment; AND
3. You perform work along specialized or technical lines requiring special training, experience, or knowledge only under general supervision; OR
4. You perform special assignments and tasks, only under general supervision; AND
5. You are primarily engaged in duties which meet the test for the exemption (meaning that you spend more than ½ your work time performing those duties); AND
6. You earn a monthly salary at least 2 times the minimum wage ($3,200 in 2016).

Again, to fall into the exemption you must meet ALL six of the requirements.

The Professional Exemption

The Professional Exemption applies to licensed professionals, such as doctors, lawyers, CPAs and engineers. It applies if:

1. You are licensed by the state of California and primarily engaged in the practice of law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; OR
2. You are primarily engaged in an occupation that is common recognized as a learned or artistic profession; AND
3. You regularly exercise discretion and independent judgment; AND
4. You earn a monthly salary at least 2 times the minimum wage ($3,200 in 2016).

Outside Salespersons

This exemption applies to any employee who is over 18 and regularly spends more than ½ their work time away from the employer’s place of business making sales or obtaining orders or contracts for products or services.

Commissioned Employees

Employees who earn more than ½ of their wages in commissions and who are paid at least 1.5 times the minimum wage ($1,200 for a two-week pay period in 2016) are exempt from overtime.

Proving An Overtime Claim

In a dispute over whether an employee is entitled to unpaid overtime, to avoid liability, the employer must prove that the employee falls within one of the exemptions in order for the exemption to apply. Each point of the exemption must be proven.

If you don’t have records of the time you worked, your testimony of approximately how many hours you worked (i.e. “On average, I worked 50 hours per week.”) can be enough. The burden then moves to the employer to prove that you did not work those hours. This is because the law places the burden of tracking of hours on the employer and an employer will not be rewarded for failing to do so. Unless you are exempt, the employer must pay you for all hours worked, even if they don’t keep track of them.