An exempt employee is an employee who is considered to be exempt or excused from overtime pay requirements. The Fair Labor Standards Act (“FLSA”) sets the guidelines for overtime pay requirements. Generally speaking, when an employer permits or requires an employee to work overtime, they are obligated to pay the employee for their overtime work. Employees who fall under the FLSA must receive overtime pay for hours worked in excess of forty hours. The FLSA does not require overtime pay for hours worked on weekends or holidays.
Exempt status focuses on the duties and responsibilities of that employee. Although the definition may vary by jurisdiction, an employee is generally considered to be exempt if they have more responsibilities than the average employee. An employee may also be considered exempt if they perform tasks that are more managerial in nature.
Because the FLSA does not place limits on the amount of time that an employer is allowed to require an exempt employee to work, such employees are exempt from being paid overtime. This is because it is assumed that the employee is working independently, and as such has more discretion in the execution of their tasks. An example of this would be how if the employee is involved in hiring and firing duties, they will likely be classified as exempt.
Certain categories of workers are automatically listed as exempt. This could include:
- Administrative personnel;
- Highly skilled workers; and
- Licensed professionals, such as doctors and engineers.
According to California law, an exempt employee is defined as someone whose job is not considered to be subject to one or more sets of wage and hour laws. In order to determine whether a California employee is exempt, there are three requirements which must be met in most circumstances:
- The employee is to be paid a salary that at least twice California’s minimum wage rate for a full-time employee;
- The employee’s primary work duties must be of an administrative, executive, or professional nature; and
- The employee’s duties must consist of using discretion and independent judgment.
When all three requirements are met, a California employee will be considered exempt from overtime pay requirements, as well as minimum wage and rest break requirements.
What Is a Non-Exempt Employee Under California Employment Laws?
Under California law non-exempt employees working over eight hours in one day, or over forty hours per workweek, must receive overtime pay for the additional hours worked. A workweek is considered six days. As such, if the employee is working additional hours on the seventh day over the forty hour workweek, they must receive overtime pay.
The overtime laws also apply to minors aged 16-17, as well as all adults over the age eighteen. California is a no waiver state. What this means is that employees cannot elect or agree to work the additional hours at their regular rate or less; rather, the employer must pay the overtime pay.
At the federal level, a non-exempt employee is one that must be paid overtime wages. They are generally referred to as hourly employees or salaried employees, although paying an employee a salary does not automatically convert them into a non-exempt worker. Generally speaking, the federal rule states that hourly employees shall be paid a wage of 1.5 times their regular rate for all work performed over forty hours, within a given time frame. This time frame is usually one week.
As such, if a non-exempt employee works more than 40 hours in one week, they are legally entitled to overtime pay for their extra work. And, the FLSA states that employees who earn less than $23,600 a year or $455 a week are considered to be non-exempt.
Are There Any Differences between Exempt and Nonexempt Employees? What Are Some Similarities between Exempt and Nonexempt Employees?
To simplify, exempt or nonexempt status refers to whether an employee must be paid according to the overtime pay standards as set forth in the FLSA. According to FLSA, employees must generally pay their workers 1.5 times their normal wage for any work they put in after a 40-hour work week. However, some types of employees are exempt from these requirements; meaning, they are not entitled to overtime pay, even if they work past 40 hours a week.
Again, state laws vary in terms of how they address exempt and nonexempt employees. An individual state will likely have its own definition of what constitutes overtime.
Some similarities between exempt and nonexempt include:
- Tax Liability: in terms of tax liability, there is no difference between exempt and nonexempt. This is because all pay is considered to be earned income, and as such it must be reported;
- Workers’ Rights and Benefits: nonexempt employees receive more federal protection than exempt employees. However, there are federal laws which apply to both classifications. These are the right to a safe and healthful work environment; the right to equal employment opportunities; the rights provided under the Family and Medical Leave Act; and, federal child labor laws; and
- Unemployment Benefits: Both non-exempt and exempt employees can collect unemployment benefits. However, these specific benefits may vary from state to state.
Which classification is better depends on an individual’s preference and lifestyle. Exempt employees are generally paid more, because they must stay and complete their assigned work. There is also a considerable amount of leeway granted to exempt employees. An example of this would be how exempt employees take breaks on the job without repercussions. However, exempt employees must stay and finish their work, regardless of how many hours it takes.
Alternatively, many employees prefer to be in nonexempt positions, as they are paid for every hour they work. In general, such employees are only required to work the assigned number of hours. However, most nonexempt employees are held to stricter standards for casual time. An example of this would be how nonexempt employees tend to be monitored more closely regarding their breaks.
What Else Should I Know About Exempt and NonExempt Employees in California?
In California, overtime pay must include all compensation the employee regularly receives as pay. The regular rate must meet the requirements for both federal and California minimum wage laws. The following is a list of common items included:
- Regular wages, such as an hourly wage;
- Non-discretionary bonuses that are measured or awarded based on hours worked;
- Commission payments; and/or
- Piecework payments.
There are some exceptions to the overtime pay requirements in California. Exemptions exist for specific categories of employers, as well as specific categories of workers. Employees who work overtime without the authorization of their employer must still be paid overtime pay, so long as the employer knows about the hours. However, if the employee conceals the overtime work in an attempt to deceive the employer and receive the additional pay, the employee will not be entitled to the pay.
Some salaried employees are eligible for overtime; nonexempt salary workers are eligible. The California government provides specific criteria that must be met in order to grant exempt status. Because of this, many salaried workers are not considered to be eligible.
An employer may require an employee to work overtime, so long as they comply with the overtime pay laws. If an employee refuses to work the overtime hours, the employer may legally be able to terminate the employee.
Should I Hire a California Lawyer if Any Disputes Arise Over Non-Exempt or Exempt Statuses?
If you are an employer, an experienced employment attorney can help inform you of your rights and responsibilities as an employer. It is important that you properly classify your employees as either exempt or non-exempt; failure to make a proper classification could lead to legal consequences for you or your business organization.
If you are an employee in California, and have been denied your overtime pay, you should contact a California employment lawyer immediately. An experienced and local employment law attorney can protect your rights and ensure you are being paid fairly and correctly. An attorney can also help you determine your best course of legal action, and represent you in court as needed, should any disputes arise over nonexempt or exempt statuses.