All employees, whether salaried or hourly, are entitled to overtime pay unless they are specifically exempted from state and federal overtime laws. Exempt employees meet very specific salary and duties requirements; all others are nonexempt and entitled to overtime for more than 8 hours in a workday or 40 in a workweek (10 daily / 60 weekly for agricultural employees).

As of December 1, 2016, the federally-required minimum salary for exempt employees rises to $47,476 — a substantial increase from the then-current $23,660 — and, for the first time, the federal minimum exceeds the California standard (then $41,600). California's minimum required salary will not reach the federal level until 2019, and the federal minimum was scheduled to increase again in 2020. Given the deadlines and media attention, classification should be a top priority.

In California, an employer must not only meet the salary threshold but also ensure the employee spends more than 50% of working time on exempt duties. Because misclassification creates serious wage/hour liability, examine both the duties and salary tests and be able to prove both are met for each exempt employee.

RECOMMENDED PROCESS: (1) list all currently exempt positions and obtain a current, accurate job description (JD) for each; (2) confirm with incumbents that JDs reflect their actual work and the percent of time spent on each category; (3) calculate whether more than 50% of working time is spent on exempt duties; (4) ensure defensibly-exempt positions are paid at or above the required salary minimum, considering scheduled future increases. Handle the project as low-key prospective compliance so as not to prompt claims over past misclassification, and make the process systematic since salary thresholds change yearly.

AGRICULTURAL OVERTIME (AB 1066): The bill would, by 2022, eliminate the 10-hour day before overtime for agricultural employees, phasing down in staggered increments beginning 2019 (9.5 hours in 2019, 9 in 2020, 8.5 in 2021, 8 in 2022).

Originally distributed as a PDF bulletin. View the original PDF.