‘Salaried’ employees may still have a right to overtime pay (California overtime law is still superior to new federal overtime law)

Q: MY job title is “manager.” I work at least 10 hours per day, 6 to 7 days per week. While I supervise a few employees, I mostly do the same tasks they do. I cannot hire or fire anyone. My employer insists that since I am salaried and paid double the hourly minimum wage, I am correctly exempt from overtime pay. Is it right that just because I am paid twice the minimum hourly wage, I shouldn’t be paid overtime?  
A: Unless you are employed in an executive, administrative, or professional capacity, California law requires that all hours worked beyond 8 in a day or over 40 in a week be paid at 1.5 times your regular rate of pay.  All hours worked beyond 12 in a day must be paid at twice your regular rate of pay.
Some employers misclassify their employees as “exempt,” make them regularly work more than 8 hours per day, and pay them a flat rate salary, in the mistaken belief that by doing so, they do not have to pay the employees overtime.
But California law strictly applies the “executive,” “managerial,” and “professional” exemptions.  An employee’s true exempt status is not determined by fancy titles or the employer’s arbitrary categorization. True exempt status is determined primarily by an employee’s duties.
For example, executives or managers must perform managerial, not merely ministerial, duties. These duties include managing the business, hiring, firing, and disciplining employees, deciding on employee salaries and wages, and creating work policies and procedures. These duties must take up more than 50% of their work time. If, for example, managers work 10-hour days, they must spend more than 5 hours per day on managerial work. And yes, among other things, the manager must be paid at least twice the state’s minimum wage for full-time employment.
Misclassification of non-exempt employees is widespread. The situation is particularly challenging for employees who are covered by federal law under the Fair Labor Standards Act (FLSA).   Under the FLSA, professional and managerial employees are excluded from overtime pay requirements if they pass certain “duties tests” or if they make more than the salary threshold, regardless of their work duties. The salary threshold is $455 per week (or $23,660 per year). This means if employees have a weekly salary of more than $455, then they do not have to be paid overtime. This salary threshold is below the poverty line for a family of four.
This week, President Obama signed a new law updating the federal overtime laws. On December 1, 2016, one of the most important feature of the new federal overtime rules will take effect: The salary threshold has been increased from $455/week to $913 (or $47,476 per year). This means that employees who earn less than $913 per week (or less than $47,476 per year) must be paid overtime of time and a half if they work more than 40 hours per week.
Unfortunately, the new federal law has not changed the definition of the term “primary duty.” This term is used in regulations to determine if a worker’s duties are eligible to be overtime exempt. Prior to 2004, ‘primary duty’ meant exempt work performed more than 50% of the time. In 2004, this 50% requirement was removed, creating a loophole that allowed a worker to be exempt even if he or she only spends a few hours a week supervising or doing other exempt duties. The loophole is still in place.
Fortunately, employees who work in California continue to be protected under California’s more protective overtime laws.

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The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com. 

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C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant recoveries for thousands of employees and consumers. He is named Top Labor & Employment Attorney in California by the Daily Journal, consistently selected as Super Lawyer by the Los Angeles Magazine, and is a member of the Million Dollar-Advocates Forum.