There are entire classes of employees who are not required to be paid overtime. The most common exemption is the administrative exemption.
Administrative exemption is commonly referred to as the “white collar” exemption. To qualify for the administrative exemption, the employee must meet both the salary requirements and the duty requirements.
(a) The employee must be paid on a salaried basis.
(b) That salary must be equal to or greater than $455 per week. Note: this amount may be higher based on state laws.
(a) Have primary duties—not merely occasional duties—that are related to the management or general operations of the business. Typically this includes roles in finance, accounting, marketing, purchasing, legal, HR, and other such roles.
(b) Use discretion and independent judgment. This means the employee has a level of responsibility that requires him or her to make judgments independently, not merely to follow standards or take direction. The discretion and independent judgment must be related to matters of significance within the organization.
It’s easy to misclassify an employee. Some important notes to know:
– The employee’s job title would imply they are exempt, but their duties don’t actually qualify. Matching job titles or job descriptions is not enough; the actual work performed is what matters.
– The employee works on items that would qualify, but they’re not his or her primary duties. Each situation needs to be reviewed individually.
– The primary duties would qualify, but there is little to no discretion and independent judgment on the part of the employee. For example, if an employee primarily performs administrative duties but relies almost exclusively on either set standards or on the direction of a superior to make any decisions, then that employee may not be exercising discretion and independent judgment in the role. In these cases, it does not matter that the duties would qualify—if the “discretion and independent judgment” requirement is not met, the employee is not exempt.
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The Law Offices of Payab & Associates is a Los Angeles based law firm with more than 17 years of experience in employment cases. Our office has successfully litigated many complex disputes including wrongful termination, sexual harassment, racial discrimination, wage and labor disputes, and retaliation cases.