Employment Law Blog

Filter:  Exempt vs. Non-Exempt

Exempt and Non-Exempt Employment in the Food Service Industry

California state laws require that all non-exempt employees be compensated at time-and-a-half for all hours worked over 8 hours per day and 40 hours in a week. See California Labor Code section 510(a) and Industrial Welfare Commission (“IWC”) Wage Order, Order No. 5-2001 section 3(A). The law also requires employers to maintain accurate time records for all of the hours worked by its employees, provide accurate itemized wage statements, authorize, permit and provide meal and rest periods, and pay all wages earned to an employee immediately upon their termination.

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Penalties in California Wage & Hour Suits

California Labor Code § 510 requires employers to pay overtime compensation for hours worked over eight hours per day and 40 hours per week. An employer may avoid paying overtime for hours worked over eight per day by adopting a valid Alternative Workweek Schedule (“AWS”). The procedures for adopting a valid AWS are set forth in Labor Code § 511 and the relevant Industrial Welfare Commission (“IWC”) Wage Order No. 16 (California Code of Regulations, title 8, § 11160, subd. 3(B), 3(C)). Among other things, the law requires an employer to hold a secret ballot election regarding the AWS amongst its employees and to file the results of the election with the State. Prior to the election, the employer must issue a written notification to the affected employees, explaining the election process and the effects of the AWS on the employees’ work schedule and compensation.

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Administrative Exemption from Overtime in California

“[U]nder California law, exemptions from statutory mandatory overtime provisions are narrowly construed. Moreover, the assertion of an exemption from the overtime laws is considered to be an affirmative defense, and therefore the employer bears the burden of proving the employee’s exemption.” Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794–795 (internal citations omitted). California Labor Code section 510(a) requires employers to pay overtime compensation—that is, to compensate its employees at a higher rate for hours worked over eight in a day or forty in a week. Lab. Code § 515(a) gives the Industrial Welfare Commission (“IWC”) the authority to establish exemptions from the overtime pay requirement. The IWC promulgated Wage Order No. 4, which relates to “professional” and “technical” employees. Cal. Code Regs., tit. 8, § 11040. The wage order establishes four exemptions from the overtime requirement: the (1) executive, (2) administrative, (3) professional, and (4) computer professional exemptions. Id. at subd. 1(A). Pursuant to the Wage Order, in order to be exempt, an employee must perform exempt duties more than fifty-percent of the time.

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Explaining Wage Order Exemptions in California

The IWC wage orders specify three exemptions for (1) executive, (2) administrative, and (3) professional employees. The exemptions are strictly defined and narrowly construed, and the employer bears the burden of proving the applicability of an exemption as an affirmative defense. Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794.

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Overtime and Misclassification in California

The test for whether a worker is an independent contractor or an employee is whether the employer has the right to control the manner and means of the worker’s performance.  S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 349–351.  A number of different factors contribute to the extent of control that an employer exercises over its workers: (1) the right to discharge at will, without cause; (2) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (3) the length of time for which the services are to be performed; (4) the method of payment, whether by the time or by the job; (5) whether the one performing services is engaged in a distinct occupation or business; and (6) whether or not the work is part of the regular business of the principal.  Id.

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The Fair Labor Standards Act and Class Action Suits in California

There are many public policy considerations that favor the use of class actions in the employment context in California.  First, individual awards in employment cases tend to be modest so the availability of a class action claim plays an important function by permitting employees a relatively inexpensive way to resolve their disputes. Additionally, class actions allow many employees, who may not otherwise file an individual suit due to fear of retaliation, to safely have their day in court as a member of the class. Class actions also serve to inform and protect employees who, for one reason or another, may not otherwise become aware that their rights are even being violated.

Meal and rest break claims are specifically suited to class treatment. See Brinker Rest. Corp., 53 Cal.4th at 1033 (certifying a California class with meal and rest break claims).

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