Misclassification: Exempt vs. Non-exempt Employees

Exempt or Non-exempt: Understanding the Differences

A worker may be categorized as “exempt” or “non-exempt” from state and federal employment laws that govern overtime pay, meal periods, work breaks, family leave, and so on.

In order to better understand which category applies to your work status and to determine whether or not you have been misclassified, consider the following:

Exempt Employees

There are a variety of positions that fall under “exempt” status and if you are currently employed in one of these occupations, you are a worker who qualifies for exemption from California labor laws governing overtime pay, minimum wage, and hour and working conditions laws.

Most workers who qualify for exemption are professional or executive employees because they are paid an annual salary instead of receiving compensation at an hourly rate. However, every employee who is salaried doesn’t always qualify for an exemption from California labor laws.

Qualifications for Exemption

Under the law, an executive or professional employee may be classified as exempt as per that individual’s job duties and compensation. In order to determine whether or not an employee meets the criteria for an exemption, he or she must meet all three of the following requirements:

• Perform job duties of an executive or professional manner for more than half of their workday.
• Perform these duties independently and at his or her own discretion
• Receive a salary that meets or exceeds twice the amount of minimum wage in the state of California in a full-time position that constitutes a work week of 40 hours.

Occupations That Commonly Qualify as Exempt

Employees who hold these occupations are considered exempt as per the California labor code. Each has its own specific guidelines that regulate the particular qualifications of the profession and how it applies to the exemption requirements listed above.

• White-collar Occupations - workers who perform executive, administrative, or managerial work as part of their daily job duties.
• Computer Professionals
• Physicians and Medical Specialists
• Outside sales workers
• Employees who work on commissions
• Government employees
• University of California employees
• Private School educators
• Laborers in the agricultural field

Non-Exempt Employees

Most other workers who do not fit into the qualification criteria of an exempt employee will qualify as “non-exempt”. This means the individual enjoys protections granted by federal and state law including minimum wage, meal breaks, rest periods, overtime pay, and other workplace protections.

Workplace Protections for Non-Exempt Employees

A non-exempt employee is a worker who does not qualify for an exemption from workplace protections granted through the Fair Labor Standards Act (FSLA) and California Labor Laws.

These workplace protections include:

Minimum Wage

Under California labor code, non-exempt employees are subject to minimum wage laws. The salary threshold for 2024 is $66,560 which breaks down to 2x the current minimum wage in the state at $16.00 an hour. That amount may be higher in certain counties and cities across California.

Overtime Compensation

Any employee of non-exempt status who works more than 40 hours in a single work week is entitled to receive overtime pay. This compensation is paid out at a rate of 1.5x regular pay.

That rate can be increased to 2x the employee’s regular pay for duties performed after 12 hours of one workday and duties performed after 8 hours on day seven of a regular work week.

Meal Periods and Rest Breaks

Under California labor laws, non-exempt employees are required to be offered suitable meal periods and rest breaks throughout a single workday.

Any employee who works more than five hours is entitled to a 30 minute meal period, but he or she may waive that period if they don’t work longer than six hours for that day. If an employee works more than ten hours, he or she is entitled to an additional 30 minute meal period.

Employees are also entitled to 10 minute rest breaks for every four hours worked in a single work day. These are paid breaks and considered part of normal working hours.

How to Address Misclassification with Your Employer

If you feel you have been misclassified by your employer, the first course of action is to bring it to their attention. Contact your human resources manager, a supervisor, or some other individual in the organization who may be able to help you fix the problem.

If that doesn’t work, then it’s time to call an employment attorney who can help you defend your rights and possibly collect compensation you may be entitled to receive in the form of unpaid overtime pay and meal periods and rest breaks that you were denied.

Employers who deny their non-exempt employees the benefits and compensation to which they are entitled under California labor code are breaking the law and, sometimes, filing a lawsuit in a court of law can result in the recovery of damages and additional punitive measures that can significantly impact an employer and prevent them from doing the same thing to another employee in the future.