Executive Exemption

Did you know that employers very often deny employees overtime pay, by claiming that the employees are executive workers? Both federal and state law require employers to pay “non-exempt” employees a minimum wage and overtime pay. But federal and state law do not protect every employee; some employees are explicitly exempt. So-called exempt employees are not entitled to overtime pay. Many of the exemptions exclude “white collar” workers, including “executive employees.” But an employee is not an executive, just because his or her employer says so.

The Fair Labor Standards Act (“FLSA”) is the federal law that governs the minimum wage and overtime pay. It is important to note that an exemption is not based on the employee’s job title. An employer cannot exempt an employee just by calling that employee an executive. Instead, the exemption is based on the employee’s substantive responsibilities and pay. In order to fall under the executive exemption, an employee must meet each of the following requirements:

• The employee must earn a salary of at least $455 per week;
• The employee’s primary job duties must include managing the business, or a recognized department or subdivision thereof; managing tasks include, but are not limited to, training employees, supervising and reviewing employees, planning budgets, and monitoring compliance;
• The employee must regularly oversee the work of at least two or more full-time employees; and,
• The employee must be authorized to hire or fire other employees, or the employee’s suggestions about hiring, firing, and other status decisions must have real weight.

Only employees who meet every one of these tests will qualify as an exempt executive professional.

The California Labor Code’s definition of an executive professional is similar to FLSA’s.

Both California and federal law state that an employer may not classify an employee as an executive unless the employee meets every single requirement. If an employee meets three out of four requirements, that is not sufficient. But employers nonetheless misclassify employees. An employer, for example, may classify an employee as an executive just because the employee supervises others, even though that employee is not authorized to hire anyone. An employee cannot necessarily rely on an employer’s classification.

It is, unfortunately, very common for an employer to misclassify an employee as an executive. If you suspect that your employer has misclassified you as exempt and denied you overtime pay, you do not have to forfeit your rights. The misclassification lawyers at Nassiri Law Group, practicing in Orange County, Riverside, and Los Angeles can help you recover the overtime pay you deserve. Call today at (949) 375-4734 for a free case evaluation.