Employers who want to save on payroll tend to overlook the distinction between exempt and non exempt employees when it comes to overtime.

May it be intentional or just an honest mistake from the employers, it is still prohibited under the law.

An employee who has been misclassified can make a claim or file a lawsuit against the employer for unfair or unpaid wages if that happens.

In the end, the employer may also be liable for more money compared to the original unpaid overtime wages to compensate the employee for their boss' actions.

But how do you determine the distinction between exempt and non-exempt employees?

To start off, let us first define what overtime is.

Overtime refers to the hours worked by an employee in excess of the 8 hours per day or the required 40 hours per week.

Under California labor law, an employee must be paid one and a half times of their regular rate for every overtime hour.

If the employee worked more than 12 hours in a day, the employee may also qualify to be paid double the regular rate.

However, as said above, there are employees who are exempt from being paid overtime.

To determine the distinction between being exempt and non-exempt, you have to look at the employee's actual work.

You have to answer the question: Where does the employee spend majority of his time in the workplace?

If the answer is that more than 50 percent of his work is in production, then he is a non-exempt employee and is eligible for overtime pay.

If majority of his time is not spent on production, then he is exempt from overtime pay.

This is regardless of the employee's title as well.

Some employers try to cheat the system by adding manager to the job title of the employee.

What you should remember is that it is not the job title but the actual work done by the employee that determines their exemption from overtime.

The law also states a couple of employment categories that automatically exempts an employee from overtime.

Some of those exemptions are:

  • Executive employees
  • Administrative employees
  • Professional employees
  • Software professional with a rate of at least $41 per hour
  • Outside salesperson
  • Employer's spouse, children and parents

If an employee falls in any of the above categories, they are automatically considered exempt from overtime.

Determining overtime exemption is more complicated as it sounds so it is advisable that you consult a labor and employment law attorney for more information.