Exempt or Nonexempt: Do You Receive Overtime Pay?

posted by Norman B. Blumenthal  |  Nov 10, 2010 10:40 AM [EST]  |  applies to California

When it comes to the idea of overtime pay, most think that only the laborer, manufacturer or other "blue collar" worker is eligible to receive overtime, not the professional, executive, supervisor or manager. In today's workplace, however, the old blue collar/white collar doesn't' always apply. A worker can be entitled to overtime pay regardless of the color of his or her collar.

Employees eligible to receive overtime pay in California are generally referred to as "nonexempt." Other employees, who are exempted from federal and state overtime laws in certain instances, are called "exempt employees." Both federal law, under the Fair Labor Standards Act (FLSA), and California law, under Title 5 of the California Code of Regulations Section 11040, establish which employees should be considered exempt. This inquiry focuses on the employee's actual day to day job duties, not fancy job titles or salaries. In fact, a higher salary often means that employees can recover more overtime wages for violations of state and federal labor laws.

Employees Classified as Exempt in California

California labor laws exempts three general categories of workers from overtime laws. It also provides a number of specific exemptions for other occupations, making employees in those fields ineligible to receive overtime. The three general exempt classifications of workers include:

1. Executives - those employed in an "executive capacity" that are involved in the "management of the enterprise," "direct the work of two or more people," have the "authority to hire or fire other employees," exercise "discretion and independent judgment," and have a salary at least twice that of minimum wage

2. Administrative workers - those who perform "office or non-manual work directly related to management policies or business operations," "customarily and regularly exercise discretion and independent judgment," work under "general supervision," "assist a proprietor or bona fide executive or administrator," and have a salary at least twice that of minimum wage

3. Professionals - those employees who are "licensed and certified by the state" in the fields of law, medicine, dentistry, optometry, architecture, engineering, teaching or accounting who "exercise discretion and independent judgment" and have a salary at least twice that of minimum wage. To qualify for this exemption, the employee must have received traditional training rather than learning a particular skill from working at the company.

In addition to employees who fall under those three general provisions, there are also exemptions for:

  • Outside salespersons
  • Inside salespersons
  • Motor carrier drivers
  • Caregivers and personal attendants
  • Certain categories of public employees

Pharmaceutical Sales Representatives: Exempt or Nonexempt?

To get around federal and state law, some employers will misclassify an employee as exempt when that employee should be nonexempt - and therefore eligible for overtime pay. Far too often, employers do this in an effort to save money by avoiding the payment of overtime. But that doesn't mean they can get away with it.

A recent example of employers avoiding paying employees overtime is in the pharmaceutical sales field. Often, the argument revolves around whether or not the sales representative is to be considered an "outside salesperson" (which is exempt) or not.

The Second Circuit Court of Appeals held in In re Novartis Wage and Hour Litigation that pharmaceutical sales representatives for Novartis were not exempt, and therefore entitled to overtime wages. Novartis claimed that the salespersons were either outside salespersons or could be classified exempt because they were administrative employees.

In a Ninth Circuit case against pharmaceutical giant SmithKline Beecham Corporation, the federal government filed an amicus brief stating that pharmaceutical sales representatives should receive overtime pay for working more than 40 hours per week.

Determining whether salespersons should be classified as exempt or nonexempt can involve very specific factual questions. If a company strictly controls the actions and decisions of its salespersons, it is more likely that the company will have to classify the salespersons as nonexempt. If the company allows the salespersons great latitude and discretion in their positions, they are more likely to be classified as exempt.

Employees in the Science and Technology Field

Employees working in the fields of laboratory science, computers, information systems and technology are also susceptible to being misclassified as exempt employees, including:

  • Computer programmers
  • Code writers
  • Lab technicians, managers and researchers
  • Software designers and programmers
  • IS business analysts and specialists
  • Web administrators
  • Content writers
If you find yourself working more than 40 hours per week and do not receive overtime and have questions as to your employee classification as exempt, contact an employment law attorney. An attorney can help you find out whether your position is misclassified as exempt and you are entitled to receive overtime pay.

External Links

Links to external sites with additional information about this topic.

posted by Norman B. Blumenthal  |  Nov 10, 2010 10:40 AM [EST]  |  applies to California

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