Debunking the Myth of Being a “Salaried” Employee

Q: I AM a salaried employee receiving exactly twice the minimum wage per hour. I have a heavy workload and I supervise a few employees but I can’t hire or fire them. My employer insists that since I am salaried and paid double the hourly minimum wage, I am 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 putting an employee on salary does not automatically make them exempt from overtime law. The law strictly applies the “executive,” “managerial,” and “professional” exemptions to the overtime provisions.  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. But experts who study the ongoing trends of where labor and employment policies may be headed are concerned that even those who are currently earning twice the minimum wage per hour may not be as better off as minimum or even mid-wage wage workers.
Says the Economic Policy Institute (EPI): “Americans are working longer hours and are more productive—yet wages are largely flat. Indeed, the median worker saw a wage increase of just 5%
between 1979 and 2012, despite overall productivity growth of 74.5 percent. One reason Americans’ paychecks are not keeping pace with their productivity is that millions of middle-class and even lower-middle-class workers are working overtime and not getting paid for it.” Even though EPI was looking at federal wage and hour laws that it concluded were “out of date,” the finding of disparity between productivity and compensation rings true even in California, where the state wage and hour laws are more protective and more generous to workers and employees.
In line with EPI’s study is a push from some U.S. senators to update the federal overtime laws. Dubbed the Restoring Overtime Pay for Working Americans Act, the Bill being circulated is meant, among other things, to ensure that people who work more get paid more, and boost incomes for those who work longer hours. One of the most interesting features of this Bill is the provision to gradually raise the overtime salary threshold for executive, administrative and professional workers from $455 a week to $1,090 a week, to match inflation-adjusted levels. This would ensure that low- and mid-wage workers earning less than this amount will be automatically eligible for overtime pay, i.e.,  if employees earn less than $56,000 per year, they are automatically eligible for overtime pay, regardless of their fancy titles.
If this federal Bill passes into law, it would be interesting to see how it affects and what changes it will prompt in California’s own state employment 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.  Atty. Sayas’ Law Office is located at 500 N. Brand Blvd. Suite 980, Glendale, CA 91203. You can contact the office at (818) 291-0088 or visit  www.joesayaslaw.com. 

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C. Joe Sayas, Jr., Esq. is trial attorney who has obtained several million dollar recoveries for his clients against employers and insurance companies. He has been selected as a Super Lawyer by the Los Angeles Magazine, featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements, and is a member of the Million Dollar-Advocates Forum.
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