In the dynamic landscape of employment law, the classification of workers is a critical factor in determining various aspects of their rights and compensation.
To shed light on this complex topic, we've compiled a list of frequently asked questions (FAQs) about the misclassification of salaried exempt employees.
FAQ #1 — What is the harm if I am misclassified as an exempt employee (i.e., salaried without overtime)?
Don't ignore potential misclassification. The damages and penalties for misclassification can be significant if you worked more than 8 hours per day or 40 hours per week or did not get to take meal and rest breaks.
If you were misclassified, your salary covers only 8 hours per day or 40 hours per week of work. However, you should have been paid straight time and an overtime premium of .5 times your regular rate of pay for working 8+ to 12 hours per day, and if you worked more than 12 hours, you should have been paid double time, which is straight time, plus 1.0 times your regular rate of pay for all hours worked over 12.
Working More Than 8 Hours a Day/40 Hours a Week
Let's say your employer pays you $60,000 annually (which totals $1,153.85/week). This is less than the minimum salary for an exempt employee in California, which means you were misclassified. Assume that in one week, you worked 9 hours per day for four days per week and 14 hours per day on another day. That is 8 hours of unpaid straight time, 8 hours of overtime, and 2 hours of double time. Assuming you had no other forms of compensation, your regular rate of pay is $28.25 ($60,000/2080 hours per year = $28.85).
Because of the misclassification, here's what you would be owed for just one week:
- 8 straight time hours: 8 hours* $28.85 = $230.80, plus;
- This is subject to liquidated damages for unpaid minimum wages for those 8 straight time hours: 8 hours * $15.50 (minimum wage) = $124.00, plus;
- 8 hours of overtime: $28.85 *.5 * 8 hours = $115.40, plus;
- 2 hours of double time = $28.85 * 2 hours = $57.70
Thus, for just the unpaid straight time and overtime for one week under this scenario, you would be owed $527.90.
Missing Meal and Rest Breaks
If you should have been classified as non-exempt, you should have been provided with meal and rest breaks.
You would be owed an hour of pay at your regular rate of compensation for each day you missed a meal break if you were not able to take:
- A 30-minute, duty-free, uninterrupted meal break, starting before the end of your fifth hour of work; or
- A 30-minute, duty-free, uninterrupted meal break, starting before the end of your tenth hour of work,
Similarly, suppose you could not take a 10-minute, duty-free, uninterrupted rest break for each 4-hour work period, taken near the middle of each such 4-hour period. In that case, you are owed an hour of pay at your regular rate of compensation for each day you missed a rest break.
There are other derivative claims. If you were not paid all you are owed, your wage statement would be inaccurate, and you would be owed penalties of $50 for the first pay period and $100 per pay period thereafter, up to $4,000.
If you no longer work for this employer and the wages owed were not paid with your final check, you are owed “waiting time” penalties at the rate of one day's pay for up to 30 days or when your employer pays you what you are owed (whichever is sooner).
As you can see, the damages and penalties owed to you for misclassification can add up. If you think you were misclassified, Advantage Advocates can help!
FAQ #2 — I am in training for a new sales position. I take classes all day and have to read/study for the next day after my shift. I am working way more than 8 hours per day, 40 per week, but I am paid a salary, so I don't get any overtime, right?
No, wrong! Certain sales positions are properly classified as exempt from the overtime provisions of CA and federal law. That means no matter how many hours you work, if you satisfy the criteria for the exemption, you don't get overtime pay.
However, time spent as a trainee is different. If you are primarily spending your time reading or studying, doing classwork, or attending classes rather than selling, you could be misclassified for the time as a trainee. And if you work more than 40 hours per week and 8 hours per day in California, you might be owed overtime.
FAQ #3 — I make far more than the minimum salary to be classified as exempt. Does that mean my employer does not have to pay me overtime?
This is related to what is known as the federal “highly compensated employee” exemption from overtime. First, in July 2023, California's minimum annual salary to be properly classified as exempt is $64,480.
California law does not recognize the highly compensated exemption. You could be misclassified as exempt, no matter how much money you make. You MUST satisfy the criteria of one of the recognized exemptions: executive, administrative, professional, etc.
Federal law, on the other hand, does recognize an overtime exemption for highly compensated employees. Along with the following criteria, you must perform at least one of the duties of an exempt executive, administrative, or professional employee.
- You must earn at least $107,432
- You must perform office or non-manual work
If you have doubts about whether you are misclassified, contact an experienced employment law lawyer. The damages owed to you could be significant if you work more than 8 hours per day, 40 hours per week.
FAQ #4 — I am a retail manager, but I spend most of my time performing the same tasks as the employees I supervise, could I be misclassified?
There are two simple ways to identify an employee who is misclassified as exempt under California law.
The first is if you make less than the minimum amount you must be paid on a salary basis. This minimum is $1,240 per week, which annualizes to $64,480. If you do not make this much in 2023, you are not properly classified as exempt.
Here is the second easy way to determine if you are misclassified as an exempt employee. If you are an exempt manager, but you are doing the same non-exempt tasks as the employees you are managing, you are probably misclassified if:
- You do these non-exempt tasks more than 50% of your work time;
- You are performing these non-exempt duties because it is required by your employer (rather than because you choose to focus on these basic tasks rather than your higher-level exempt work)
Have You Been Misclassified as an Exempt Employee? Advantage Advocates Can Help
The misclassification of employees as salaried exempt is a complex issue with far-reaching implications. Employers should be diligent in understanding and applying the criteria for exemptions accurately, but they often are not.
At Advantage Advocates, we give California employees an advantage in employment disputes. If you're facing employment disputes, you need a strong legal advocate that can enforce your rights. Regardless of why your employer isn't following the law, you shouldn't have to pay the price.
Contact us today to schedule a consultation.