Is It Better to Be Exempt or Non-Exempt?

Workers in California or any other state are classified as either exempt or non-exempt, a designation that qualifies them for different standards of wages, supervision, and other expectations.

How do you know if you’re considered exempt or non-exempt? The difference between employee classifications can be confusing but is relatively straightforward when broken down. If a worker is misclassified, it may be a violation of California labor laws.

What is a Non-Exempt Employee?

Essentially, a non-exempt employee, according to Investopedia, is a worker entitled to be paid at least minimum wage for their work, plus overtime pay, under the Fair Labor Standards Act (FLSA). While they are typically paid by the hour, non-exempt employees can also be paid a salary. By definition, however, all non-exempt employees earn less than $455 each week.

On top of these monetary restrictions, non-exempt employee status also requires certain distinctions in supervision. Non-exempt employees are directly supervised, and only a small portion of their work involves personal discretion or independent judgment.

What is an Exempt Employee?

An employee who is considered “exempt” from the Federal Labor Standards Act, especially as it applies to overtime pay and minimum hourly wage, are instead paid for the work they perform — always in the form of a salary. Exempt employees must earn more than $455 per week, says Investopedia. For exempt employee status, the employee must also spend at least 50% of their work time using discretion and independent judgment.

In California, the minimum wage is $12 per hour, making overtime wages $18.50 per hour.

Only certain job categories qualify for exempt status — executive, professional, and administrative, which broadly encompass many types of jobs, but necessarily exclude others. At the state level, specific requirements for exempt or non-exempt status sometimes differ, so make sure to check out your state’s labor laws.

Which is Better — Exempt or Non-Exempt?

Both exempt and non-exempt employee positions have pros and cons. Typically, exempt employees earn more in salary than those who work as non-exempt employees on a 40-hour workweek. An exempt employee can also rely on a steadier paycheck. Non-exempt employees may be monitored closely to ensure their productivity is high.

It is important to note, however, that non-exempt workers are paid for any extra work. In other words, if they work more than 40 hours in a week, they must be paid overtime or time-and-a-half. By contrast, exempt employees do not receive additional compensation for longer hours despite exempt employees generally being expected to come earlier and/or stay later, depending on what the job requires to get it done properly.

California labor laws also provide more protection to non-exempt employees than those who are exempt.

The pros and cons of exempt or non-exempt status can differ widely from state to state, just as each state sets its own minimum wage. The federal minimum wage is $7.25 an hour. Some states have a minimum wage of $12 or even $13.25 per hour, and, according to NPR, and there is a growing push to increase the federal minimum wage to $15. Although the House of Representatives passed an act raising the federal minimum in 2019, the bill was blocked by the Senate and has not gone into effect. [https://www.vox.com/2019/8/16/20807610/raise-the-wage-act-15-minimum-wage-bill]

Depending on the state and the job, there is no “better” exemption status. Rather, it depends on the needs of each individual.

The Fair Labor Standards Act

The Fair Labor Standards Act has regulations for a number of wage and hour issues, such as minimum wage, overtime, record-keeping, and child labor laws.

Violations of the FLSA can include failing to pay minimum wage, failing to pay overtime of at least time-and-a-half for all hours worked over a 40 in a 40-hour workweek, or failing to properly keep records of employee time and pay, among others.

Workers may also be subject to stricter state laws, which vary by state. In California, for instance, the minimum wage has increased to $12 per hour for small businesses and $13 per hour for businesses with 26 or more employees. If state and federal labor laws differ, the worker is subject to whichever minimum wage is higher. California labor laws are some of the country’s most advantageous for workers.

Although there are regulations about who qualifies to be classified as exempt or non-exempt, some workers claim that employers misclassified them for a variety of reasons. In addition to simple misclassification mistakes, employees may also be misclassified because employers want to save money. For example, employees who should be classified as non-exempt and entitled to overtime pay and other wage benefits may be classified as exempt by employers who don’t want to pay time and a half overtime wages, provide lunch or rest breaks, or keep track of their employees’ hours. In these cases, employers may be subject to fines or required to pay the worker back wages.

Misclassification may also occur when a job’s duties change. However, just because an employee was hired as exempt or non-exempt does not mean that this classification will always apply. Employee classification is based on the duties of the job currently being performed.

Filing a Wage and Hour Lawsuit

Workers have filed successful FLSA lawsuits over many types of violations including employers encouraging employees to work overtime off the clock, failing to provide employees with required meal or rest breaks, failing to pay workers overtime pay when the overtime work was not authorized, miscalculating overtime pay, or giving employees incorrect or incomplete pay stubs.

If you are a California worker and believe you have been misclassified or subject to wage and hour violations — such as inadequate overtime pay or inaccurate pay stubs — you may be able to file a lawsuit and pursue compensation. Doing so holds your employer responsible for their actions and helps protect your coworkers’rights.

Wage and hour laws can be complicated and the prospect of litigation overwhelming, but consulting a California labor law attorney may help you determine if you have a claim, navigate the complexities of litigation, and maximize the compensation you may receive.

Sometimes, workers avoid fighting labor law violations because they are worried about retaliation in the workplace, or even being fired. Fortunately, there are anti-retaliation laws at both the state and federal level that are designed to keep protect workers from exactly this sort of retaliation.

These laws prohibit employers from threatening, firing, refusing to promote, or otherwise discriminate against workers who report FLSA violations. In many states, employees who are retaliated against after reporting FLSA violations are allowed to sue the employer for compensation.

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