Properly Classifying Exempt Employees

Employers, start 2018 with a resolution you can keep.  By ensuring you know who your exempt and nonexempt employees are, you can avoid one less headache in this new year.

Employers who have or want to have exempt employees must be careful to ensure these employees meet various state and federal exemption requirements.  California has several different exemptions, including: an executive exemption, an administrative exemption, a licensed professional exemption, a creative professional exemption, a commissions-based salesperson exemption, a computer professional exemption, and a private school teacher exemption.  (See, e.g., 8 C.C.R. § 11040 & Lab. Code §§ 515, 515.5, 515.8).  One of the biggest mistakes employers make is thinking that if they pay the employee a salary, then the employee is automatically exempt and not entitled to overtime pay.  Wrong.  Each of these exemptions have specific duty and salary requirements.

Watch out for misclassified employees!  Nonexempt employees are entitled to overtime pay, and employers who misclassify their employees may be liable for back wages, taxes, penalties, interest, and attorneys’ fees.  Another danger of misclassification is that the employer may not have records of an employee’s hours, so it can be hard to defend against a claim the employee was not fully compensated over an extended period of time.  So, if you have a question about the classification of an employee, be proactive in asking your attorney.

© 2018 Ben Jakovljevic