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Burden on employer to justify exempt/Nonexempt classification

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When deciding on whether an employee is exempt or hourly, be prepared to justify why you classified an employee into the category you did. If the employee challenges your designation and sues for unpaid overtime and other entitlements as an hourly employee (for example, meal and rest periods or itemized pay statements), it’s up to the employer to prove it properly classified the employee.

Advice: If you have any doubts about classification, seek out professional help. Getting it wrong can get very expensive, especially if you have incorrectly classified an entire group, and a court allows a class- or collective-action claim.

Recent case:
Prasad Medepalli worked as a computer coder for Maximus, which had contracts to provide computer software for California’s Healthy Families program. After he lost his job, Medepalli sued, alleging he had been wrongly classified as an exempt professional.

He argued that he didn’t exercise any independent judgment, and simply wrote computer code.

But the company showed that Medepalli did far more. He was essentially asked to look at a complex problem and to develop a computer software solution. For example, he had to take into account variables such as different California rules, regulations and other factors to develop the software interface that government employees would use to determine eligibility and payments.

That was enough for the court to rule that the company had correctly classified Medepalli as exempt. (Medepalli v. Maximus, No. 06-2774, ED CA, 2008)

Final note: It’s a good idea to keep a current copy of all California Industrial Welfare Commission (IWC) wage orders handy. IWC wage orders regulate wages, hours and working conditions for California employees. The IWC has a set of 17 wage orders that apply to specific types of employees. You can download the latest versions from www.dir.ca.gov/iwc/wageorderindustries.htm.

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