By: Brad Nakase, Attorney
Email | Call 888-600-8654
For two years, Portia has been a manager at Grandad’s Crawdad Pad, a restaurant in Santa Monica serving New Orleans-style cuisine. While she is charged with monitoring servers and the quality of food coming out of the kitchen, she does not have the power to hire or fire employees. She is also paid by the hour. Her boss, Charlie “Po’Boy” Jenkins, has informed Portia that as an exempt employee, she is not allowed to take meal breaks. He says that she is needed around the clock to supervise the restaurant. But Portia begins to wonder whether she is really exempt. It seems to her that Po’Boy Jenkins is merely trying to save money by not paying her overtime and giving her meal breaks. Exhausted and angry, Portia hires a lawyer to see if she is actually a non-exempt employee and to sue her boss over denied rights.
Exempt employee misclassification occurs when an employer treats a non-exempt worker as exempt in order to deny that worker overtime, meal breaks, and rest breaks. An employer might misclassify an employee in order to save money while increasing productivity.
In California, all employees are automatically non-exempt. For an employee to qualify as exempt, an employer must prove that the employee meets a set of very strict requirements. If an employee qualifies as exempt according to this list, the employer does not have to pay overtime or provide meal and rest breaks.
In California, there are a few different types of exempt positions. These include the following:
Note: While hourly employees are most often non-exempt, it is possible for exempt employees to be paid an hourly wage.
In our example, Portia does not qualify as an exempt employee. Her boss, Charlie “Po’Boy” Jenkins does qualify, as he makes the executive decisions for the Creole kitchen.
Let’s look at a few more examples of exempt employees:
Jessie, who manages a team of five people, all of whom she has hired.
Lance, who designs computer programs for a living.
Yolanda, who works as a neurosurgeon at UCLA.
To be classified as an exempt employee, a worker must meet the following conditions:
Let’s test our knowledge:
Hamza works at a real estate office in 2022. He has been told that he is an exempt employee. His salary is $58,900. Is he exempt?
Answer: No, he is not exempt. His salary is less than twice the minimum wage in California.
Colleen works at Target, where she is called a manager. She manages a team of ten people and has the ability to hire and fire employees. Is she exempt?
Answer: Yes, she is exempt. She manages a team of two or more people and has the ability to hire and fire.
Roger works at Best Buy. He loves to work with computers but spends his day mostly selling them to customers. He is paid $20 an hour. Is he exempt?
Answer: No, he is not exempt. Though Roger may have IT knowledge, he is not employed as an IT worker with specialized knowledge and decision-making ability.
There are some professions where misclassification is more common than others. These include the following areas:
Employers may be tempted to misclassify non-exempt employees as exempt, because then they don’t have to pay overtime or provide meal and rest breaks. By paying a lump sum amount (a salary), they can save money.
Whether an employer breaks the law intentionally or due to ignorance, workers who are misclassified are entitled to be compensated for unlawfully denied overtime and breaks.
As a state, California is very protective of its workers, and the penalties for the misclassification of employees are severe. It is therefore possible for misclassified employees to recover tens or hundreds of thousands of dollars in unpaid overtime and penalties.
Employers who misclassify their employees may be sued over the following:
