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What is an exempt and non-exempt employee?

Employers are required to classify employees as either exempt or non-exempt. The major difference between the two categories is that non-exempt employees receive overtime pay, whereas exempt employees receive the same pay regardless of how many hours they work in a pay period. However, sometimes employees are wrongly classified as exempt, and may be owed unpaid overtime.

The California Wage Orders recognize numerous employee exemptions. However the three main categories of exempt workers are: administrative, executive and professional (commonly called “white collar” exemptions). In general, “Executive Exemption” refers to those who manage two or more people and have real input on hiring, firing and performance review. “Administrative Exemption” refers to certain high-level individual contributors such as high-level financial analysts, marketing managers, stockbrokers or advertising account managers. Both executive and administrative employees must spend over half their time on exempt duties. “Professional Exemption” refers to certain degreed professionals such as doctors, lawyers, teachers, certified public accountants, architects and engineers.

Employees in these categories may be ineligible for overtime pay, but only if they meet several criteria. These include being paid a salary at least twice the California minimum wage. Currently that minimum salary is $720 per week or $37,440 per year. Even if you earn more than this, you may still be non-exempt if you actually spend more than half of your time performing non-managerial duties (i.e., the same types of duties as non-exempt employees). This is not dependent on job title. For example, even if your title is “manager,” and your employer classifies you as “exempt” you may actually be non-exempt and entitled to overtime if you mostly perform non-managerial tasks.

In addition, certain other types of jobs may be considered exempt by definition under law, including airline employees, outside sales force (if they truly spend most of their time outside the office) and truck drivers who cross state lines. As there are numerous exemptions, and the laws governing when they do and do not apply are complex, it is best to consult a skilled attorney specializing in employment law if you have any suspicion you are not classified correctly.

If you suspect you are wrongly classified as exempt, or any other overtime, minimum wage or other wage error by your employer, McCormack & Erlich has an extensive background helping individuals with wage claims to recover their damages.

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