Most litigation over whether employees are classified properly as exempt from overtime turns on whether employees spend the majority of their work time performing exempt duties. However, employers should not forget the salary basis requirement. In Negri v. Koning & Associates, No. H037804 (Cal. Ct. App. May 16, 2013), the California Court of Appeal assumed that an insurance adjuster performed more than 50% of his time performing exempt duties, but still found he had been misclassified as exempt because he was paid an hourly rate based solely on the number of hours he worked processing claims and was not guaranteed a minimum salary. Labor Code Section 515(a) exempts an employee from overtime pay eligibility only if s/he is “primarily engaged in the duties that meet the test of the exemption, customarily and regularly exercises independent judgment and discretion in performing those duties and earns a monthly salary no less than two times the state minimum wage for full time employment.” In Negri, even though the employee’s hourly rate significantly exceeded two times the state minimum wage, his wages did not constitute a salary. Consequently, the employer wound up paying 20 hours of overtime for all 66 weeks the employee worked for the company. For more on Negri, click here http://www.courts.ca.gov/opinions/documents/H037804.PDF.
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