Some employers illegally claim that salaried employees, employees with a management title, or employees with management and/or administrative duties, are not entitled to overtime pay. In fact, your title and method of compensation have nothing to do with your right to overtime pay in California.
Every employee in California is presumed to be entitled to overtime:
- Any time that you work in excess of 8 hours in a day or 40 hours in a week you are required to be compensated at a rate of 1.5 times your normal rate.
- Any time that you work in excess of 12 hours in a day you are required to be compensated at a rate of 2 times your normal rate.
Exemption from overtime payment requirements
Exempt means that there are exceptions to the above-referenced rule, and for some positions, overtime pay is not required. Exemption claims are narrowly construed against the employer and the employer bears the burden of showing all the criteria for exempt status. Generally, in order to be exempt from overtime all of the following must apply:
- You must be primarily (over 50% of your time) engaged in duties which meet the test of the exemption. Examples of exempt work include:
- interviewing, selecting, and training employees
- recommending pay rates and hours
- directing work, keeping production records of subordinates for use in supervision, evaluating the efficiency and productivity of employees
- handling employee complaints
- disciplining employees
- planning and/or distributing work
- providing for the safety of employees and property
- recommending changes in status
- controlling revenues and expenses
In contrast, examples of non-exempt work include:
- Performing the same kind of work as subordinateemployees,ordinate employees
- Performing any production or service work, even though not like that performed by subordinates, which is not part of supervisory function
- Making sales, replenishing stock, returning stock to shelves, except for supervisory training or demonstration purposes
- Performing routine clerical duties, such as bookkeeping, cashiering, billing, filing, or operating office machines
- Checking and inspecting goods as a production operation, rather than as a supervisory function
- Performing maintenance work
- You must regularly direct and supervise the work of two or more other employees.
- You must have the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight.
- You must customarily and regularly exercises discretion and independent judgment.
- Your responsibilities must include the management of the enterprise in which you are employed or of a customarily recognized department or subdivision thereof.
- You must also earn a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment.
Other exemptions include an outside sales exemption designed for employees who are primarily engaged (over 50% of their time) in making sales, or selling contracts or orders for specific services or facility use for which payment will be made by the client. Outside salespeople, as defined by the Industrial Welfare Commission (IWC) means any person who customarily and regularly works more than half his working time away from the employer’s place of business selling products or services. A commission sales exemption is designed for employees covered by Wage Orders 4 and 7 (workers in retail, technical, clerical, mechanical and similarly employed industries). The commission sales exemption requires that the employee be principally engaged in selling (i.e., over 50% of the working hours) and receive more than 50% of his or her compensation from commissions on goods or services. In order to constitute commissions, the compensation received must be based on a percentage of the sale price of the product or service.
Employer Must Keep Records
Employers have a legal obligation to keep accurate time records for all employees entitled to overtime pay. An employer’s failure to maintain such records does not impact an employee’s right to claim overtime. The employee’s hours can be based upon employee testimony which approximates the number of hours worked. Employees are allowed to testify from memory based upon the approximate or average number of hours worked in a day/week/month. That approximation is controlling unless the employer can respond with more credible evidence to contradict the employee’s testimony.
Employer May Not Retaliate
It is against the law for an employer to take any retaliatory action against an employee in response to an employee exercising a legal right such as seeking overtime pay, or other legally required employment benefits. Such conduct by an employer exposes the employer to further legal action for all damages caused by the retaliation — including claims for punitive damages.
Employer May Not Try to Waive Overtime Pay
It is illegal for an employer to enter into an agreement with an employee whereby an employee waives overtime compensation. Any such agreements are void.