Salary Misclassification

Employers often misclassify employees as exempt, i.e., salaried, to avoid paying them overtime wages or to avoid complying with other labor law requirements.

If an employer misclassifies an employee as exempt and pays only a salary, they can sue for unpaid overtime and other damages and penalties under various Labor Code provisions, including sections 203, 226, 226.7, 510, and 2699(f)(2) of the California Labor Code.

An employee can only be properly deemed exempt if:

• The employee receives a minimum salary of at least twice the minimum wage
• The employee’s job duties involve the use of discretion and independent judgement; and
• The employee’s primary duties (i.e. over 50% of employee’s work time) are administration, executive or professional (See California Labor Code section 515(a)).

Additionally, there are certain types of jobs that can also be properly considered exempt from some laws including:

• Commissioned employees
• Outside salespersons;
• Computer software professionals;
• Doctors;
• Truck drivers;
• Union employees.