Which Salaried Employees Are Exempt From Overtime

After my last blog post giving the basics on salaried employees rights to overtime compensation I did not specifically address the exempt categories as it would have required more time and space than the main point of the blog to explain.

The first thing to understand about the exemptions is they are all statutory - you can find a link to the complete list Here (Opens a link in new window to a CA Government Site).  However upon careful inspection you will find it is a little more complicated than it might appear at first glance.

Categorical Exemptions
There a few groups of people who are entirely excluded by their industry including:
Employees in the computer software field, Employees of any state, or local government ,Outside Salespersons (Not as simple of a concept as it sounds), Family relations i.e. Parent, Spouse, child., National Service Programs like Americorp. and such other industry's as Taxi Cab Drivers, and Irrigators.  This list is not exhaustive there are more categorical exemptions and if you are curious the link provided above contains them all.


Executive, Administrative, and Professional Exemptions
I like to think of these as the catchall exemption, once you take out the categorical ones, many of the people left might be in an executive, administrative or professional role for their employer.  At first glance it seems they might just swallow everyone else up and make the widely distributed idea that salaried employees don't receive overtime pay seem true.  So before I begin to look at each exemption on its own keep one important thing in mind:  The courts will weigh these factors against the Employer, not the Employee.  What that means roughly is that it is the burden on the Employer to prove you are whatever classification they say you are, and mere job titles will not suffice actual day to day duties would be used to determine if you meet any of the following tests.

Executive Exemption
- Manager of the enterprise, department, or subdivision.
- Customarily and Regularly directs the work of two or more other employees.
- With the authority to hire/fire OR whose opinion on such matters as well as promotions will be given particular weight.
-Customarily and regularly exercises discretion and independent judgement
-And is primarily engaged with the above listed duties.

Administrative Exemption
-Performs office or non-manual work directly related to management policies or business operations, or Performs in the administration of a school system or department within the system in work directly related to the academic instruction or training carried on.
-Customarily and regularly exercises discretion and independent judgement
-Regularly and directly assists a proprietor, or a fellow employee who is employed in a bona fide executive or administrative capacity or who performs under general supervise specialized or technical work who executes under general supervision special assignments and tasks
-Primarily engaged in the above duties.

Professional Exemption
This categorically exempts the following professions if you are licensed by CA and engaged in the practice of: Law, Medicine, Dentistry, Optometry, Architecture, Engineering, Teaching, or Accounting
It also exempts the so called Learned or Artistic Professions.  Learned professions are those requiring advanced knowledge gained by prolonged eduction, not to be confused with a general eduction, or an apprenticeship.  Artistic Professions are those whose work is original and creative in a recognized field of art, and the work reflects the invention, imagination, or talent of the employee or work that is essential to the above work. 
Either profession type must also produce work that is intellectual and varied in character so that whatever is produced or whatever result is accomplished cannot simply be described by the number of hours it took to complete. (As opposed to routine mental, manual, mechanical, or physical work).
Customarily and regularly exercised discretion and independent judgment in the duties above.

These three exemptions all raise the bar rather high for an employer to claim all their employees fall within one of these groups.  Just imagine how many managers at stores spend more than half their time just working normal shifts.  Or how many administrative assistants have no discretion in their duties and either wait for instruction or call to ask for authorization for any substantial decision.  Or how many people in the learned professions spend the overwhelming majority of their time following standard operating procedures.  These categories are not very easy to satisfy they are all specialized persons with a lot of authority and independence which is a stark difference from the situation that many salaried employees in California face.

Overtime and the Salaried Employee

Ask yourself or your friend or any number of friends whether or not salaried employee's are entitled to overtime pay if they work longer than an eight hour day and the almost unanimous response is no.  Somehow this so called common knowledge has permeated through society so even high school students have heard of this concept and some may even believe it to be true.

Thankfully this common knowledge is incorrect in many instances.  California (Links to CA Dept of Industrial Relations) explicitly defines a work week at 8 hours in a day or 40 hours in a week, if either of these thresholds is crossed then California mandates they be paid at 1.5x their wage.  I believe this is one reason why many people think salaried employees are not entitled to overtime pay they do not think a salary is compatible with the idea of time and a half pay rate.

However, converting a salary to an hourly pay rate is rather simple. 

1. Determine the weekly rate:  Divide the salary by number of weeks worked (Generally 52 for a full year).
2. Now you take that number and divide it by 40 this will give you your regular rate of pay 

Example:  Employee is salaried at $36,000 and works for simplicity's sake 50 hours a week for 52 weeks.

1. 36000 / 52 =  692
2. 692 / 40 = 17  Meaning this employees average rate of pay is $17 an hour.
3. 10 hours a week of overtime x 52 weeks = 520 hours at 25.50 per hour = $13,260 in unpaid overtime.  (This is a large amount of overtime that is very consistent resulting in a high number used for simplicity's sake your own situation would of course be different).

The bad news is there are some exemptions, the good news is that they are generally construed against the employer not the employee though I suggest contacting an attorney to review your situation if you feel you are being unfairly compensated.  Real situations are more complicated than the simple one I have illustrated here.

I hope this helps to educate people about the facts surrounding the rights of salaried employees in California.

California Privacy Law Update for Mobile Application Creators

If you missed it last October, California Attorney General Kamala Harris sent threatening letters to approximately 100 mobile app developers who were not in compliance with California privacy laws. These laws require that apps which record consumer information disclose to the end-user exactly what information is being recorded, how that information is used, and whom it is being shared with.

Generally speaking, the Attorney General’s main concern about mobile products stems from their use on small screen – specifically, a lengthy disclosure would amount to a large wall of text that very few users would actually read in their race for the accept button to actually use the application.

On January 10, the Attorney General gave some clarification on how mobile developers can bring their products in line with these requirements. The Attorney General recommends that mobile developers give users access to this privacy information in the form of pop-ups or icons. Specifically, she wants something more conspicuous than a wall of text.

If you have a mobile application that a single user in California takes advantage of and you do not have conspicuous disclosure of how you use any information you collect from users, you are in violation of California law.  And we recommend you work quickly and diligently to correct that error and bring yourself into compliance with the law.

The Attorney General has already filed the first lawsuit for violating this law against Delta Airlines for their mobile app “Fly Delta,” which the Attorney General claims has lacked a conspicuous privacy policy since 2010.

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