Exempt vs. Non Exempt

Exempt or Non-Exempt from Overtime

“We will just pay all employees a salary, and make them Exempt.” I’d like to have dime for every time I’ve heard that.

California is a sticky state in regards to classifying employees as Exempt or Non-Exempt, as the laws and regulations are stricter than the Federal laws. Employees must be classified correctly based on their actual job duties and must fall under one of the following exemptions to be exempt: Executive, Administrative, Professional, Artists, or Outside Salespeople. They must also make two times the minimum wage for the Exempt status to apply.

The employee’s job title and method of payment are irrelevant in classifying exempt employees.* Employees must meet all the requirements under one of the Exemptions listed.

Executive Exemption:
This is usually for management employees, but managers must meet all the requirements:
-Management of department or division
-Direct the work of two or more employees
-Has authority to hire and fire
-Exercises discretionary powers
-Is primarily engaged (more than 50%) in the above duties.
-Earns a monthly salary of no less than two times the minimum wage.

Examples of non-exempt work:
-Performing the same kind of work as subordinates
-Production work
-Making sales, stocking
-Clerical duties

Administrative Exemption:
To determine if an employee is exempt under the Administrative Exemption we need to look at the duties the employee performs and well as their salary. They must meet the following requirements:

-Has duties involving office or non-manual work directly related to management policies or operations
-Performs customary and regularly uses discretion and independent judgment in executive or administrative capacity.
-General supervision only of work for specialized or technical duties which require special training.
-Primarily engaged (more than 50%) in the above activities and monthly salary is no less than two times the state minimum wage.

Examples of non-exempt work:
Clerical, deliveries, operating equipment, inspecting, tabulating data.

Professional Exemption:
A professional employee must meet all of the following requirements to be considered exempt under the Profession Exemption:
- Is licensed by the State of California and in the practice of one of these professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; or
- Is primarily engaged in an occupation that is known as a learned or artistic profession such as specialized intellectual instruction in science, original and creative artistic work, work that is predominately intellectual.
- Exercises discretion and independent judgment
- Earns a monthly salary no less than two times the state minimum wage.

Examples of non-exempt work: Nurses, paralegals, uncertified accountants, editors, artists, copy writers

Examples of exempt professions: Doctors, attorneys, CPA’s, licensed civil and mechanical engineers.

Support staff does not usually fall into the Exempt classification. Someone once said, “Well, let’s change their job duties so we can make them Exempt.” You really can’t change the job duties of a receptionist or mail clerk to make them fit into an exempt category. Plus, they probably don’t make twice the minimum wage.

As managers, we try to protect organization from labor disputes by classifying employees correctly. Some employees are well versed in California labor law, not just for their own personal use, but also for advising clients. We must classify employees correctly and not try to make them fit into one category or another. The labor board just won't buy it.


Reference: 2008 California Labor Law Digest. California Chamber of Commerce.

Death of a Co-worker

This a subject not discussed in business administration classes. How does an office deal with the death of a co-worker? As a manager, how do you handle the grief yourself and the grief of others at the same time? Recently, this very situation has happened in my office. I was told by the President about the passing of a 46 year old co-worker. I gasped so loud I think others heard me through my closed door. My boss was having such a hard time getting the words out, that I thought I was being fired. I was shocked to say the least. The President advised he was going to advise a few other people, and then I needed to arrange an all staff office meeting. I could not even think, let alone, arrange a meeting. I finally gathered my thoughts and arranged a meeting for an hour later. In that hour, I had to confine my feelings and emotions until everyone was told. Hard to do, but since I was in shock, I just denied what I had heard.

The President made the announcement at the meeting. Everyone was in shock; some started crying instantly, and while others where just in a daze. As a manager and professional, somehow, I had to reach down deep and find the strength to deal with my own sorrow, while at the same time deal with the sorrow of everyone else. Since I had an hour head start on dealing with the sad news, I probably had an advantage in helping others deal with the news. After the meeting, I gathered myself enough to be able to walk around the office and check on people. I know they were not “okay” but I asked anyway. Some employees wanted to talk about it; while others retreated to their cubicle and wanted to be alone. Each person dealt with the grief in their own way. I just kept watch. I decided an email to an individual might be more appropriate than a face to face discussion for those who wanted to be left alone. Not much work got done, understandably so.

On the second day, the weight of the sadness was still pretty heavy, but employees were more open to talking. On the third day, the office mood was still pretty heavy, but I noticed people started to coming to terms with the death, and were more at peace. It was still hard to walk by his office and see his family portraits, plaques, paintings, and all the individual items. I did not deem it appropriate to immediately clean out the office, but it will have to be done eventually.

We decided to have a lunch in his honor. Since there are no services, per his wishes, we had our own office tribute to him. We decided to have a slide show to display fun pictures of him during lunch. Surprisingly, gathering all the pictures for the slide show was very therapeutic. All the fun times, smiles, and laughs helped me come to terms and accept his sudden death. The lunch memorial gave some closure to staff and hopefully some peace. We told different stories of fun times with Glenn. We laughed, and we cried. It was good for everyone.

We are creating a scrapbook of all the pictures and stories to present to his family.

When I think I have experienced the hardest point in my career, I am hit with a new level of difficulty.