Are you an exempt employee?

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A great deal of tension exists between salaried employees and their employers.  When a salaried employee has been determined to be exempt, that employee, therefrom, is deprived of many of the labor code protections and benefits (including, but not limited to, overtime pay, meal breaks, rest breaks, and work time reporting).  Determining whether or not an employee is exempt is not an easy task.  It is the employer’s responsibility to prove the employee is exempt. The CA legislature has detailed what they believe must be met to exempt an employee.  The work actually performed must be examined together with the employer’s realistic expectation and the realistic requirements of the job. (California Labor Code § 515)

First, the employee must be primarily engaged in exempt work.

CA uses a “quantitative test”
o   More than 50% of employee’s work time MUST be spend on exempt tasks.
o   CA laws are more protective of employees than the Federal laws.

FED uses “qualitative test”
o   Primary duties of the employee are exempt work.

Exempt work:
o   Managerial, supervisory, professional, and administrative tasks
§  Directly and closely related activities may be exempt work.
§  Occasional non-exempt tasks don’t count as exempt work.

Second, the employee must customarily and regularly exercise discretion and independent judgment in performing the employee’s duties. (29 CFR § 541.207).  This exercise includes the comparison and the evaluation of possible courses of conduct, and acting or making a decision after considering the possibilities.  The employee must have the authority or power to make independent choices, free from immediate direction or supervision and with respect to matters of significance.  Application of skill and procedures does not always involve independent judgment and discretion.

Third, the employee must fulfill the realistic expectations and requirements of the job.  The Ramirez Court created a test to determine whether the employee performed in such a substandard manner the he/she did not meet the realistic expectations of the employer: (1) whether the employee’s practice diverges from the employer’s realistic expectations; (2) whether there was any concrete expression of the employer’s displeasure over an employee’s substandard performance; and (3) whether these expressions were themselves realistic given the actual overall requirements of the job.

Fourth, an employee MUST earn a monthly salary equivalent to no less than two (2x) times the state minimum wage for full-time employment. The salary amount is a minimum standard, which cannot be undercut by an action initiation by an employer.  A salaried employee is compensated not for the general value of services performed and not the amount of time spent on the job.  In other words, it is a person paid an amount that bears no relationship to the number of hours worked in any particular week. (As of 10/17: 25 or less employees = $41,600 & 26 or more employees = $43,600)