An “exempt employee” is one who does not have to be paid overtime. Federal law is quite clear on this matter. You are exempt if one or more of the following is true:
- You have managing the enterprise as a primary duty, have the authority to hire or fire others and regularly direct two or more employees (This is an “exempt executive” – anyone who owns at least 20% of the business is also considered exempt, perhaps because they would be paying overtime pay to themselves).
- You do non manual work directly related to the operation of the business – examples include marketers, office managers, insurance agents. You make independent decisions, can decide policy, and commit the company on significant matters (such as purchasing).
- You are a specialized professional such as a doctor, dentist, or vet – you have advanced knowledge and have gone to school for a long time and are performing duties directly related to said advanced, intellectual knowledge.
- You primarily make sales away from your employer’s office.
In addition to one of these four, you need a salary of at least $23,660 a year ($33,280 in California), unless you are making outside sales. Job duties are more important than titles. There have been attempts to increase this amount, which is rather outdated, but they have been unsuccessful.
Misclassification of employees is a constant problem. For example, somebody may have the title of “manager” but not routinely direct others (although they may qualify under point two above instead). Also, some companies think salaried employees are automatically exempt because they are paid the same regardless of the amount worked – this is not true. Another common misconception is that employees can be given comp time instead of overtime pay. In fact, comp time is only legal for employees who are exempt from overtime. If you pay somebody hourly or by commission, they are not considered exempt, even if they meet the other criteria.
If you have been misclassified, then your employer owes you back pay (generally double what the employer failed to pay you). It is best to try to get the mistake corrected before going to court – although it is illegal to fire you for pointing out the problem, hard feelings and tension are likely to ensue. Also, if you have been misclassified, you are probably not alone. Working with other victims of the error (which it generally is) can help you get satisfaction from your employer without having to go to court.
It is worth pointing out that misclassification tends to benefit everyone except the employer when it comes out. Also worth considering is whether your employer can afford the back pay and the amount owed – some small companies have literally been driven out of business. The sooner the mistake is corrected the better for everyone. You should, in fact, bring it up as soon as you notice it. Pay attention to job descriptions – missing or unclear job descriptions have been known to cause confusion about how an employee should be classified. Job titles are essentially meaningless as the statute refers to duties, not to the title.
Establishing whether you are exempt or not is relatively simple, but if you discover you have been misclassified and need advice, you need a good employment lawyer to help you straighten things out. A quality employment attorney will be able to double check how you should be classified, give you advice on approaching your employer and ultimately support you if you need to go to court.
Aiman-Smith & Marcy are consumer fraud, employment and class action attorneys operating out of Oakland, California. They specialize in employment issues including unpaid overtime and wages, and have taken on powerful companies on behalf of employees who have been misclassified or not paid overtime due. If you think you have been misclassified as an exempt employee and asked to work more than 40 hours a week, contact them today for a free initial consultation.
