ARE YOUR EMPLOYEES ENTITLED TO OVERTIME? NONEXEMPT VERSUS EXEMPT CLASSIFICATION OF EMPLOYEES UNDER CALIFORNIA LAW.
April 27, 2018
I. Reasons for Wage and Hour Protective Laws.
Modern wage and hour protective laws have developed in the United States since the early 1900s as a result of horrendous cases of employer abuses in working hours, working conditions, and antiunion employer sentiment. Wage and hour laws have progressed steadily since, with changes often dependent upon the national or state political party in office. The laws were enacted to protect low paid workers typically employed in factory and agriculture work, but have expanded to include white collar as well as blue collar employees.
This article focuses on nonexempt versus exempt employees and the relevance to overtime pay. The article presumes the worker is an employee of the business, and not an independent contractor or self-employed individual. Whether an individual is an employee, independent contractor, or self-employed individual is a separate analysis.
II. California Overtime Rates of Pay.
California law assumes all employees are classified as nonexempt. This means they are not excluded from Labor Code requirements like meal and rest breaks, minimum wage and overtime pay. Due to their pay and duties, exempt employees are excluded from certain hour and wage requirements
In California, a “regular” workday is eight hours, and a regular workweek is 40 hours. A nonexempt employee must be paid overtime pay when the employee works more than eight hours in any workday, more than 40 hours in a workweek or works on the seventh consecutive workday in a workweek.
The rate of overtime pay is one and one-half times an employee’s “regular rate of pay” for work over eight hours up to 12 hours in a workday, and for the first eight hours worked on the seventh continuous day of work in a workweek. An employee is entitled to double the employee’s regular pay rate for all hours worked over 12 in any workday, and for all hours worked beyond eight hours on the seventh successive day of work in any workweek.
According to state law, the overtime rate of an employee’s compensation obligated to be paid to a nonexempt full-time salaried employee is determined by using the regularly hourly salary as one-fortieth of the employee’s weekly salary.
In conclusion, determination of whether an employee is nonexempt and entitled to overtime pay or exempt is often difficult. Many employees fall in gray areas requiring review of the employee’s job duties followed by application of current law. New legislation and appellate court decisions regularly change overtime and other wage and hour laws. Further, state law may overlap with or contradict federal law, rules and regulations.
Kenneth J. Sargoy, Esq., provides counseling and representation regarding employment matter in California and federal courts and state and federal government agencies. Questions may be directed to Ken at telephone 310-208-1003 or or contact him. The office is located at 815 Moraga Drive, Los Angeles, CA 90049. To view the website of The Sargoy Law Firm, click here: http://sargoylaw.com.
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