Not all employees earn overtime for working more than eight hours in a day or 40 hours in a week. Typically, exempt employees are paid a salary rather than an hourly rate, and employers are not required to pay them overtime. Salary misclassification is against the law (both federal and state), and there are protections in place for workers.
At David Yeremian & Associates, Inc., a Glendale, California, employment law firm focusing on wage and hour issues, we are committed to protecting the rights of clients who have been misclassified as exempt. These workers can end up working significantly more hours than their job requires without being fairly compensated at the overtime rate they deserve.
What is Salary Misclassification?
Salary misclassification occurs when an employer says you’re exempt from overtime, even though you are entitled to overtime pay under California and federal laws. Sometimes employers misclassify workers so they can save money, but sometimes it’s really just an oversight or the employer doesn’t understand California’s wage and hour laws.
EXEMPT VS. NONEXEMPT WORKERS
Often, employers attempt to classify workers in a way that allows them to save money. In order to make employees appear to be exempt from overtime payment, employers may give them titles that imply they have exempt status when their job descriptions do not fit that title.
In order to qualify as an exempt worker under California law, an employee must be in an administrative, executive or professional role. In most cases, these classifications require that an employee must:
- Supervise other employees
- Exercise discretion and independent judgment in performing duties
- Perform at least 50 percent managerial duties
5 Signs That You’re a Victim of Salary Misclassification
In many cases, employees are misclassified and don’t even realize it. Check out this list of five signs that an employee is misclassified and see if any of them match up to your situation:
- You’re paid hourly (unless you’re a computer employee, in which case there are exceptions)
- You’re classified as an independent contractor when you should be an employee
- Your primary duty is manual labor
- You do work that’s an integral part of the employer’s business
- Your employer never performed the “Duties Test”
Here’s a closer look at each.
#1. You’re paid hourly.
In most cases, employees who make an hourly wage are entitled to overtime benefits. In order to be exempt from overtime laws, you must receive a set salary (which can change – so if you’re not sure what it is currently, talk to an employment lawyer in Glendale).
There are some exceptions: If you’re a computer worker, you must receive a certain hourly wage (which is also subject to change). Another exception can occur when you work in outside sales, which has no salary requirement.
#2. You’re classified as an independent contractor when you should be an employee.
A contractor is a person or company that undertakes a contract to provide materials or labor to perform a service or do a job.
An employee is a person employed for wages or salary.
Look at the chart below, which outlines the main differences between employees and contractors.
|Can work for more than one company at a time||Typically only works for one employer|
|Sets own hours||Works at times and for durations set by the employer|
|Works from any location||Generally works in the employer’s place of business|
|Does not receive employment benefits, such as health insurance, sick pay or overtime pay||Is eligible for employment benefits, such as health insurance, sick pay and overtime pay|
|Works independently often or most of the time||Works under the employer’s control|
|Can perform tasks in any manner, without the employer’s input or direction||Is subject to the employer’s guidelines on performing tasks|
|Bears costs associated with performing the job||Does not incur costs or make personal investments associated with performing the job|
|Pays own taxes; employer does not withhold taxes||Employer withholds taxes and provides employee with a net salary|
|Cannot claim unemployment compensation benefits||Is generally eligible for unemployment compensation benefits if terminated or laid off|
|Cannot claim worker’s compensation benefits||Can claim worker’s compensation benefits|
|Can be “let go” without reason or notice||Can usually only be terminated for good cause and with notice, unless employment is of another nature|
|Receives pay according to a contract’s terms and conditions||Receives at least federal or state minimum wage, and is covered by employment laws like overtime pay|
|Is not typically protected by employment laws involving discrimination or workplace safety||Is protected by employment laws involving discrimination and workplace safety laws|
Related: Contractor vs. Employee
#3. Your primary duty is manual labor.
If your primary duty is manual labor, which means you do repetitive operations with your hands, physical skill and energy, you are generally not exempt from overtime laws (which means your employer must pay you overtime if you work the right amount of hours). This can, but doesn’t always, apply to:
- Operating engineers
- Construction workers
- Iron workers
- Other laborers
If you suspect you’re entitled to overtime in one of these (or a similar) profession, you may need to talk to your employer – but if you’re not satisfied with the answer your employer gives you, it may be time to talk to an attorney. Salary misclassification is against the law, so it’s important that you understand the protections available to you.
#4. You do work that’s an integral part of your employer’s business.
If your employer’s company couldn’t function without the work you do, but you’re classified as an independent contractor, you’re likely misclassified.
#5. Your employer never performed the “Duties Test.”
In order for your employer to classify you as exempt from overtime rules, it must perform a “Duties Test.”
Are You a Victim of Salary Misclassification?
At David Yeremian & Associates, Inc., we are diligent and thorough, crafting strong cases that protect our clients’ rights. Our lawyers are skilled negotiators and litigators who level the playing field and give clients the support they need to stand up to their employers and demand just compensation.