Exempt employees in California must meet specific requirements. First, they must be paid on a salary basis, and the pay must be at least twice the California minimum wage. In addition to meeting the salary requirements, each type of exemption has its own job duty requirements that must be met for an employee to qualify. Here, we take a closer look at the professional exemption as an example.
Exempt employees in California: The professional exemption
Some people who qualify for the professional exemption are easy to identify, such as those licensed or certified by the state of California, including those in law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting, for example.
The professional exemption can also apply, however, to those primarily engaged in a learned or artistic profession. “Learned or artistic profession” means “requiring advanced knowledge in a science or learning field customarily acquired by a prolonged course of specialized intellectual instruction and study, distinguished from general academic education or apprenticeship, and from training in routine mental, manual, or physical processes an essential part of or necessarily incident to any of the above work.” Marc L. Jacuzzi told us in a recent CER webinar. This person must also exercise discretion and independent judgment in the performance of their duties. This is a long definition; let’s break it down:
The regulations explain that work requiring advanced knowledge means work that is predominately intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment. An exempt professional employee generally uses the advanced knowledge to analyze, interpret or make deductions from varying facts or circumstances. Work involving routine mental, manual, mechanical or physical work is not work requiring advanced knowledge. Advanced knowledge cannot be attained at the high school level.
Fields of science or learning are occupations with recognized professional status, as distinguished from the mechanical arts or skilled trades. Fields of science or learning include: law, theology, medicine, pharmacy, accounting, teaching, architecture, engineering and the physical, chemical or biological sciences.
This phrase “prolonged course of specialized intellectual instruction” means that the learned professional exemption is limited to professions where specialized, academic training is a standard prerequisite for entering the profession. The best evidence that an employee meets this requirement is possession of the appropriate academic degree.
The learned professional exemption is not available for occupations that may be performed with only the general knowledge acquired by an academic degree in any field; knowledge acquired through an apprenticeship; or training in the performance of routine mental, manual, mechanical or physical processes. The exemption also does not apply to occupations in which most employees acquire skill by experience.
Exempt learned professionals include: lawyers, doctors, dentists, teachers, accountants, pharmacists, engineers, actuaries, chefs, athletic trainers and funeral directors or embalmers.
Within the professional exemption, there are both learned professionals and creative professionals. Let’s look now at the creative professionals.
In addition to the salary requirements, the creative professional exemption applies only if the employee’s primary duty is the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
The requirement of “invention, imagination, originality or talent” distinguishes the creative professions from work that primarily depends on intelligence, diligence and accuracy. The creative professional exemption also does not apply if the employee’s work can be produced by a person with general manual ability and training. Since the duties of employees vary widely, the determination of exempt creative professional status must be made on a case-by-case basis, based on the extent of the invention, imagination, originality or talent exercised by the employee.
The recognized fields of artistic or creative endeavor include music, writing, acting and the graphic arts. Thus, exempt creative professionals include groups like musicians, composers, conductors, novelists, screen writers, actors, painters and photographers.
The above information is excerpted from the webinar “Exempt vs. Nonexempt in California: How to Find and Fix Misclassification Mistakes.” To register for a future webinar, visit CER webinars.
Marc L. Jacuzzi, Esq., is a shareholder in the law firm of Simpson, Garrity, Innes & Jacuzzi. He advises clients regarding all aspects of the employer/employee relationship including hiring and termination, wage and hour requirements, employee classification, civil rights and discrimination issues, employee investigations, commission plans, employment contracts, employee handbooks and policies, confidential information agreements, reductions in force, leaves of absence, employment audits, M&A employment issues, violence in the workplace, and international employment issues.
Don’t overlook the importance of the salary prong. In Negri v. Koning & Associates, the California Court of Appeal recently found that a claims adjustor paid on an hourly basis wasn’t paid a salary because his pay wasn’t “predetermined” and therefore didn’t qualify for the professional exemption–even though his pay was more than twice the minimum wage.