Under California law, employees are entitled to overtime payments unless the law exempts them from protection. But those exemptions are to be narrowly construed. It’s up to employers to justify each exemption they claim.
To meet that burden, make sure you spell out the details of the claimed exemption for each employee you classify as exempt, and specify how the employee meets each requirement. It may help to use a checklist. Better yet, design the job description using the California Labor Code’s exemptions. Then make sure the job the employee actually performs does not stray significantly from the job description.
By clarifying the employee’s exemption beforehand, you minimize the risk that you’ll have to pay overtime and penalties for a misclassified employee.
Recent case: Michael Eicher worked for Advanced Business Integrators (ABI) as a senior consultant, helping the company’s customers install and use software for scheduling staff, managing payroll, and handling other details in sports and entertainment venues.
Eicher had a degree in sociology, not computer science. His job did not include hiring or firing other employees, negotiating contracts with customers or advising ABI or customers on business policies or practices. Eicher, who was paid $60,000 per year, often worked more than 40 hours per week and did not receive overtime for those hours.
He sued under California’s Labor Code, alleging he was due overtime. ABI couldn’t persuade the court that such an administrative employee was exempt. The court pointed out that California state law construes exemptions more restrictively than does the federal Fair Labor Standards Act, under which Eicher might have been exempt. Instead, the court said Eicher was not exempt because he merely helped customers use ABI’s software—he made no policy recommendations. (Eicher v. Advanced Business Integrators, No. C051746, Court of Appeal of California, 2007)
Final note: It pays to have professionals who understand both California and federal