While California law generally requires employers to pay overtime when employees work over eight hours in a day or 40 in a week, certain executive, administrative, and professional employees are exempt from this requirement if they meet three conditions: 1) the employee is paid on a salary basis; 2) the employee earns a certain minimum amount; and 3) the employee performs certain kinds of duties at work.
At the Employer Resource Institute’s 2007 California Employment Law Update conference, held Dec. 10-12 at the Claremont Resort and Spa in Berkeley, wage and hour experts Sandra L. Rappaport, Esq., with the law firm of Hanson Bridgett in San Francisco, and Stephanie Fong, Esq., with the firm of Morrison & Foerster in Los Angeles, stressed that the costs to an employer of taking some action that strips an otherwise qualifying employee of exempt status, can be steep, perhaps adding up to millions of dollars in back overtime. What are the risk areas? Rappaport and Fong laid down the “Seven Deadly Sins” that can cause employees to lose their exempt status:
- Docking pay for disciplinary reasons.
- Docking pay for absences of less than a day.
- Docking pay for jury duty and military leave when the employee performs any work during that week.
- Docking pay when it isn’t legal.
- Docking pay for a reduced workload.
- Requiring the use of accrued vacation during temporary shutdowns.
- Allowing or requiring exempt employees to perform too many nonexempt duties.
For more information on avoiding exempt classification problems, pick up ERI’s exclusive Employer Guide, “Who’s Entitled to Overtime: How to Avoid Mistakes When Classifying California Employees.” (Start your guest access and get this now)