Employers must be careful when classifying employees as exempt from overtime. Misclassifying employees can lead to serious legal risks, as California has strict wage and hour laws. If an employer wrongly classifies an employee as exempt, they may get denied overtime pay they are legally entitled to receive.
What is exempt vs. non-exempt?
California law is stricter than federal law when it comes to telling the difference between exempt and non-exempt workers. Non-exempt workers must get overtime pay for hours worked over 8 in a day or 40 in a week. Exempt workers, who usually have executive, administrative, or professional jobs, do not have to get overtime pay.
Exempt employees must meet specific criteria: earning at least twice the state minimum wage, spending over 50% of their time on exempt duties, and exercising independent judgment. Job titles alone do not determine exempt status; actual duties matter.
Legal risks for employers
Employers may face penalties from the state. The risks include state penalties, civil fines ranging from $5,000 to $25,000 for willful misclassification, and back pay for unpaid overtime, missed breaks, and other benefits. Employers could also be liable for attorney fees if the employee wins the case.
Impact on employees
When an employer misclassifies an employee as exempt, they may lose out on significant wages. This misclassification can result in financial strain. Additionally, pursuing legal action to recover these lost wages can be a lengthy and stressful process, potentially leading to costly litigation.
The importance of legal counsel
Both employers and employees should seek legal counsel before responding to a misclassification issue. Missteps early on can damage your position, making it harder to resolve the problem.
The correct support can provide valuable guidance in navigating California’s complex wage and hour laws.