Many employees are told by their employer that they are “exempt” from overtime because they are salaried or because they have the title of “manager.” This in many cases is not true. First, since January 2008, California law requires that unless a manager is paid a minimum salary of $33,280, that employee is entitled to pay for all overtime worked. Second, California law requires that, regardless of an employee’s title or whether the employee is salaried or hourly, an employee must be paid overtime if he or she spends 50% or more of his or her working hours doing non-managerial tasks. Non-managerial activities include:

• waiting on customers;
• making sales;
• working the cash register;
• stocking or taking inventory; and
• generally doing the work of hourly employees.

If as a salaried manager you spend most of your time engaged in such activities, you may be entitled to overtime pay.

Another type of misclassification is calling an employee an “independent contractor,” when in fact the person is an employee, and entitled to all of the California Labor Code protections and pay that comes with that status. Under California law, whether a worker is an independent contractor depends on many factors. As a general rule, if the worker does work for only one business entity, and that entity keeps general control over the worker’s operations as a whole, the worker is likely an employee of that entity (rather than an independent contractor) who is entitled to pay for all time worked, including minimum wages, and overtime pay. Misclassified independent contractors are also usually owed reimbursement for expenses that they have been covering because the company has told them that they are “running their own business,” and responsible for paying those themselves. If an employee has been misclassified as an independent contractor, this is not true, and the employee is owed expense reimbursement.

The federal government stated recently that it believes up to 30% of employers misclassify their workers as independent contractors. They are cracking down on this through investigations, audits and stiff penalties for incorrect classification. It is simply unfair for employers to avoid all of the legal obligations they have to employees by calling those employees, “independent contractors.”

There are other types of misclassification, as well. For example, some employers claim employees are exempt from overtime wages because they are “inside salespeople.” However, unless an employee is making a certain percentage of their total compensation in commissions, they are not eligible for the inside sales exemption, and they are owed minimum wages and overtime pay.