There are two types of employees: exempt and non-exempt, and the difference between the two is distilled in federal law, specifically the Fair Labor Standards Act (FLSA).
The FLSA outlines the federal minimum wage, overtime pay eligibility, and recordkeeping standards for the private and public sectors in all 50 states. The term “exempt” actually means “FLSA-exempt.”
In 2016, the California State Legislature passed SB 3, signed into law by Gov. Jerry Brown, which phased in an annual minimum wage increase from $10 to $15 on Jan. 1, 2023.
Is It Better To Be Exempt or Non-Exempt?
Employees who have exempt status are not protected by federal law or California wage and hour laws, unlike non-exempt employees.
Typically, an exempt employee is an executive, administrative, or professional personnel, making them highly compensated employees.
There are pros and cons to both employment types. It’s important to know how you’re classified when you fill out paperwork at a new job. If you’re unsure, it should say on your paystub if you’re salary, exempt, non-exempt, or hourly.
Non-exempt and hourly are interchangeable, with non-exempt employees frequently referred to as hourly.
Benefits of being an exempt employee
- Exempt or salaried employees must be paid twice the hourly wage. With SB 3, and historic 2022 inflation, effective Jan. 1, 2023, salaried employees must be paid $31 per hour (15.50 hourly wage), based on an assumed 40-hour work week. In certain California counties, the salary amount will be higher.
- Salaried employees have the added security of steady paychecks. While the tradeoff is employers can ask you to work additional hours when business is busy without overtime pay, you’re paid for working 40 hours per week even during slow seasons when hourly workers are sent home early.
- Salaried employees usually have greater access to benefits packages, bonuses, and paid vacation time.
Benefits of being a non-exempt employee
- An hourly wage affords employees more flexibility, such as working specific shifts.
- Overtime provisions require employees 18 years of age or older to be paid 1.5 times the employee’s regular rate for all hours worked in excess of eight hours and double the employee’s regular rate of pay for all hours worked in excess of 12 hours in any workday.
Hourly employees are entitled to meal or rest breaks, specifically one unpaid 30-minute meal break no more than 5 hours after you clock in and two paid 10-minute rest breaks during an eight-hour shift.
What Are The Exemptions to Wage And Hour Laws?
The California Labor Code lists categories of employees who have exempt status, including:
- Executive Employee (CEO, CFO, COO, Vice President, Director)
- Administrative Employee (Executive Secretary, Personal Assistant, Manager)
- Professional Employee (Lawyer, Senior Accountant, Webmaster)
- Computer professionals
- Licensed physicians and surgeons
- Private School K-12 Teachers
- Government and University of California employees
- Outside salespeople (make more than 1.5 times the minimum wage and earn more than half of their compensation from commissions)
A job title, job titles, and job duties are rarely an indicator of exempt vs. nonexempt employees. For instance, registered nurses are paid overtime unless they work in administrative or executive capacities.
A salary basis test factoring the amount of independent judgment compared to other employees and minimum wage requirements will determine your employee classification.
If your employer has violated your rights the legal experts at Shimoda & Rodriguez Law, PC will guide you through all your available options.
Have I Been Misclassified?
Signing a document or contract stating that you agree to be an exempt employee or your employer paying you on a salary basis does not make you exempt.
Most employers count on you not knowing your rights and assuming you’re exempt because you’re paid a salary and work a white-collar desk job. If you’re misclassified, you should alert your manager and HR professional. If you’ve recorded project hours worked while you were misclassified, you’re entitled to compensation for any overtime hours, missed meal breaks, and skipped rest breaks.
Shimoda & Rodriguez Law, PC Specializes in Cases Involving Misclassification of Non-Exempt Employees
If your employer violated your right to overtime wages by classifying you as exempt when you should’ve received an hourly rate of pay as a non-exempt employee, you may have an employment law case in California.
Contact our office for skilled representation for your case. We provide phone consultations. To speak with an attorney, call us at 833-201-0213 or send our firm an email. We will promptly return all email contacts with a phone call.