Wage & Overtime

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Wages and Overtime
Federal and California Employment law is a special area of law that is broad, complicated, and under constant development. Many laws were created in California to protect employees of companies or other establishments. Since this area of law is very Hot now, I would like to dedicate three articles concerning employment in California. Part One will deal with issues regarding employee wages and overtime. Next month, Part Two will focus on issues regarding employment contracts. The following month, Part Three, will explain the hottest topic in employment litigation, besides wage and overtime violations, harassment at work.

The majority of employees are paid either on a hourly or salary basis. There is a significant difference. Generally, salary based employees are exempt from minimum wage and overtime compensation. On the other hand, hourly employees are entitled to at least minimum wage and overtime compensation.

What is a true Salary Employee:
Some employers may call employees salaried and exempt them from overtime compensation, however, in order to be considered a true salary employee in California and to be exempt from overtime payments, certain tests must be satisfied; if these tests are not satisfied, the employee is may be entitled to overtime payments:

Monthly Salary test: The employee must receive a monthly salary of at least TWICE the state minimum wage for full-time employment. (Example – At a $6.75 minimum wage, the minimum monthly wage is [$6.75 x 2 x 40 x 52] / 12 = $2,340.00 per month.)

Primarily Engaged Test: An employee is “primarily engaged” in exempt duties on if more than one-half other employee’s work time is devoted to the exempt duties; such as those stated below.

Administrative Employee Test: The employee’s duties are exempt from minimum wage and overtime requirements pursuant to California Regulations; the employee meets the “primarily engaged” and the Monthly Salary tests stated above; and the employee customarily and regularly exercise discretion and independent judgment.

Executive Employee Test: An executive employee is exempt from minimum wage and overtime requirements if the executive if such job duties are consistent with California Regulations; the executive meets the “primary engaged” test stated above; the executive has the power to hire and fire employees, participates in management of the business, and the executive must customarily and regularly direct the work of at least two or more other employees; and the executive must customarily and regularly exercise discretionary power and judgment.

Professional Test: Many professionals are exempt from minimum wage and overtime compensation. This generally applies to professionals who are licensed or certified, such as lawyers, doctors, CPAs, etc. However, there are certain exceptions and rules that are to numerous to put in this article – please contact a lawyer for more information on this test.

If the employee doesn’t meet these tests, specifically the administrative, executive, or professional test, then the employee is probably entitled to at least minimum wage pay rate as well as overtime.

Current California minimum wage is $6.75 an hour. Overtime is to be paid as follows:

One and one-half times their regular rate for work exceeding eight hours in a day or 40 hours in a week, and double time is required for hours in excess of 12 on any workday or in excess of eight on the seventh day. In lieu of overtime pay, an employee may receive compensating time off at a rate of one and one-half hours for each hour of employment (or more if a higher rate of overtime is due) if provided under a written agreement between an employer and the employee.

Both employers and employees should be very careful on whether they designate and employee as a salaried employee (exempt) or an hourly employee (non-exempt). If an employer fails to designate properly, they may be monetarily liable for all overtime worked by employees improperly designated as exempt. In large companies, this could amount to millions of dollars and for small companies, it could destroy them. By the way employers, in many cases, these unpaid wages are not dischargeable in bankruptcy.

Lastly, California law is protective of aliens who are not authorized to work. That’s right, even if the employee is an illegal alien, they can recover all wages they are entitled too. A person’s immigration status is “irrelevant” for purposes of enforcing California labor and employment laws. Undocumented workers (not authorized to work) are entitled to all the protections, rights and remedies available under California law; and NO INQUIRY IS PERMITTED INTO A PERSONS IMMIGRATION STATUS except as necessary to comply with federal immigration laws. This means, if you are not authorized to work, but you are working in California and an employer does not pay you wages or overtime pursuant to California law you can sue the employer and no inquiry can be made regarding your immigration status. The rationale of this law is to prevent employers from taking advantage of undocumented workers.