class 4 - exempt/non-exempt EEs and wages

Question 1

must know:

Answer 1

 Express contract
 Implied contract, definition and factors
 Effect of long-term employment on at-will contract
 Legal effect of employee handbook
 When progressive discipline policy applies (to address misconduct issues,
such as theft and tardiness) and when it does not (to address performance
issues).
 Advantages and disadvantages of employee handbook
 Holding and reasoning of Tomlinson v. Qualcomm
 The ABC test for determining independent contractor status
 Concept of hours worked,” including difference between California and
federal law and concept of control as basis for determining employer’s
liability to pay for hours worked
 Treatment of commuting time and when it must be compensated.
(Distinction between Hernandez and Konica-Minolta cases)
 Treatment of on-call time
 Treatment of time spent in lectures, etc. (See assigned “On the Road
Again” Law at Work column
 Holding and reasoning of Morillion
 Holding and reasoning of Overton
 Categories exempt from overtime, including all of the elements
 Effect of incidental lost hours by exempt employees
 What triggers obligation to pay premium pay, including doubletime to
non-exempt workers
 Rights and responsibility of employer toward workers who work
unauthorized overtime
 Holding and reasoning of Ho

Question 2

The main federal law affecting workers’ pay is the Fair Labor Standards Act (FLSA).

Answer 2

This law sets out federal requirements for minimum wage and overtime pay
Also prohibits wage differences based on gender, requires you to pay employees for all the work hours and sets out the rules regarding the employment of workers under 18

Question 3

Although its coverage is broad, here is a few instances in which it does not apply:

Answer 3

If you operate a farm, your workers aren’t entitled to full FLSA coverage
If you run a transportation business that’s regulated by the federal Motor Carrier Act, there’s an overtime pay exemption for workers whose activities affect the safe operations of vehicles such as certain drivers, drivers’ helpers, loaders and mechanics

For states with stricter requirements, you must follow the stricter rule
- EX: California’s wage and hour laws are stricter than FLSA so employers follow California law

Question 4

Wage and Hour Laws Don’t Cover Independent Contractors

How can you tell if they are economically independent? Consider the following questions:

Answer 4

Wage and hour laws cover employees not independent contractors
The FLSA considers workers to be independent contractors if they’re economically independent from your business.

1. Do you have the right to control how the individual performs the work, as opposed to simply accepting or rejecting a final product? The more you control the way the work is done, the more the worker looks like an employee.
2. Does the worker have an opportunity for profit and loss? If the worker bears the economic risk of doing business, then that’s a factor in favor of independent contractor status.
3. Does the worker have any investment in equipment and facilities?
4. Do the worker’s services require special skills?
5. How permanent is the relationship between you and the worker? A long- term relationship—especially one that lasts for a year or more—is a factor in favor of employee status
6. Are the worker’s services an integral part of your business? If so, it’s more likely that the worker is an employee.

Question 5

Who is exempt and who isn’t?

Answer 5

Employees who are always non exempt:
These employees are always entitled to overtime pay and a minimum wage

Employees who are always exempt:
These employees are never entitled to overtime pay or a minimum wage

Employees who are exempt if they meet certain requirements:
The bulk of workers get classified under the rules described in this section

Employees who are exempt from overtime only:
These employees are still entitled to a minimum wage

Question 6

Employees who are always nonexempt

Answer 6

These employees are always entitled to both overtime pay and a minimum wage, these employees are blue-collar employees and first responders

Blue collar employees are people who perform work involving repetitive operations with their hands, physical skill and energy
EX: carpenters, mechanics, electricians, plumbers, construction workers, laborers etc.

First responders are workers on the front lines of protecting safety and health. Most first responders are public employees like police officers and firefighters. Some are in the private sector too such as emergency medical technicians, ambulance personnel and hazardous materials workers

No matter their title or how much they earn, these workers are always entitled to a minimum wage and OT pay

Question 7

Employees who are always exempt

Answer 7

There are a handful of employees who are always exempt and are never entitled to OT or minimum wage:
Employees of seasonal amusement or recreational businesses (ski resort, amusement parks etc.)
Employees of local newspapers having a circulation of less than 4,000
Newspaper delivery workers
Switchboard operators employed by phone companies that have no more than 750 stations and
Some farmworkers

Question 8

Employees who are exempt if they meet certain requirements:

Answer 8

The FLSA identifies several categories of employees as being exempt if they meet certain requirements:
- White-collar employees (executive, administrative and professional employees)
- Highly paid employees
- Outside sales employees
- Computer workers
- Appretencies

Question 9

White-collar employees

Answer 9

To fall into this category, employees must meet all of the following requirements:

1. Earnings requirement. They must earn at least a set minimum amount per week
   At least $684 per week (35K a year) to be exempt from OT and minimum wage requirements
2. Salary basis. They must receive their minimum earnings on a ”salary basis”
   Set amount weekly or biweekly
   Don;t reduce the amount they earn per pay period because of variations of quality or quantity of work (if you do then they are no longer exempt)
   If a salaried worker misses work to take care of personal business, you shouldn’t reduce their salary to make up for that time because they put may hours of OT without getting paid extra
3. Duties. They must perform certain duties that involve executive, administrative or professional skill

Question 10

While docking an employee’s salary will generally make an employee nonexempt, in the following situations, you can dock the employee without jeopardizing exempt status:

Answer 10

when the employee is absent from work for one or more full days for personal reasons other than sickness or disability
for absences of one or more full days due to sickness or disability if you make the deduction under a plan providing for wage replacement benefits (such as a workers’ compensation plan that pays workers for time missed due to a work-related injury or a paid sick leave policy)
to offset amounts the employee receives as jury or witness fees, or for military pay
for penalties imposed in good faith for infractions of safety rules of major significance, or
for unpaid disciplinary suspensions of one or more full days imposed for infractions of workplace conduct rules

Question 11

executive employees

Answer 11

Executive employees are people you hire to run your business or one of its departments
Duties such as planning budgets and monitoring legal compliance

They have a lot of autonomy in doing their jobs and have people working under them

To fit within the executive employee exemption, the employee must:
-Have the primary duty of managing a business or one of its departments
- Regularly direct the work of at least two or more full-time employees (or their equivalent) and
- Be authorized to hire or fire employees or make recommendations for hiring, firing and promotions that carry special weight

Question 12

requirements for executive employees- what does it mean to manage

Answer 12

interviewing, selecting, and training employees
deciding how much to pay employees and creating their work schedules
directing employees’ work
maintaining production or sales records for use in supervision
appraising employee productivity and efficiency for use in recommending promotions or other changes in status
handling employee complaints and grievances
disciplining employees
planning the work
determining the techniques to be used
apportioning work among employees
determining the type of materials, supplies, machinery, equipment, or tools to be used
determining the merchandise to be bought, stocked, and sold
controlling the flow and distribution of materials or merchandise and supplies
Providing for the safety and security of employees or business property
Planning and controlling the budget, or
Monitoring or implementing legal compliance measures

Question 13

executive employee examples

Answer 13

This employee fits within the exemption -
Joe works for a mail-order company where he manages the shipping department. Salary of 50 a week. Directs three employees who he can hire or fire. He is an exempt executive employee

This employee does not fit within the exemption -
Jerry works for a mail-order company where he is called the “shipping department manager” and receives a salary of 690 a week. Jerry packages orders and gets them ready for UPS to pick up. He also directs the work of two junior employees who are assigned to him but he does not get to hire or fire them (coworker) nor does he have any say about their promotions or pay increases. He is not an exempt executive employee despite his title.

Question 14

administrative employees

Answer 14

These employees don’t supervise other workers but play important roles in making businesses operate efficiently and properly
If these employees make important business decisions and have a fair amount of authority they may qualify as exempt administrative employees

To be an exempt administrative employee under the FLSA a worker must:
Primarily do office or non-manual work directly related to managing a business or its general business operations, and
Exercise discretion and independent judgment on significant business matters

Question 15

administrative employees - Work directly to managing a business or its operations

Answer 15

Work directly to managing a business or its operations

The work must be related to running or servicing a business rather than making thing for serving customers
- Employees who work on production lines or sells products do not meet this test
- Workers who prepare nuggets or procures supplies or handles advertising or PR will meet it

Question 16

administrative employees - examples

Answer 16

This employee doesn’t fit this prong of the test
Helen works as a barista. Her work isn;t directly related to managing the business so she does not meet the first test for benign an exempt administrative employee

This employee does fit this prong of the test
Harold is an accountant for a chain of coffee houses. His work is related to managing the business so she may be an exempt administrative employee if he also meets the second test

Question 17

administrative employees - Discretion and independent judgment on significant business matters

Answer 17

Some factors the USDL looks at in applying this regulation:

Can the employee formulate and interpret management policies?
Does the employee carry out major assignments affecting business operations?
Can the employee commit your business in matters that have significant financial impact?
Can the employee waive your established policies without prior approval?
Does the employee provide expert advice to management?
Does the employee handle and resolve complaints or grievances? Here are a couple of examples to illustrate how this administrative employee

Question 18

administrative employees - examples

Answer 18

This employee fits within the exemption
Irma is the estimator for a firm. She discusses proposed new jobs with customers. She figures out how much the firm should charge and quote. Irma resolves disputes and is paid 1000 a week

This employee does not fit within the exemption
Irving works as a book-keeper for a firm. He pays bills and oversees their accounts. He operates under guidelines but can not deviate. He is paid 800 a week. He does not exercise independent judgment on significant business matters

Question 19

Learned professionals - administrative employees

Answer 19

Lawyers, accountants, doctor, dentists, engineers, teachers, scientists, architects, and pharmacists are usually exempt if their jobs involve using their own judgment

Includes nurses etc.

Question 20

Creative professionals

Answer 20

Someone who primarily performs work requiring invention, imagination, originality or talent
Journalists may qualify if their work is creative (ex: unique interpretation)

Question 21

certain highly paid employees

Answer 21

Most employees who earn big bucks will be exempt because they qualify as executives, administrators or professionals. Occasionally, a high earner can’t be neatly pigeonholed into one of these white-collar categories

Such an employee is exempt from OT if all of the following requirements are met:
- The employee must perform office or nonmanual work.
- The employee must meet a minimum earnings requirement.
- Currently, the employee’s total annual compensation must be at least $107,432, including at least $684 per week paid on a salary or fee basis
- The employee must regularly perform at least one of the duties of an exempt executive, administrative, or professional employee, as summarized above

Question 22

certain highly paid employees - examples

Answer 22

This person fits within the exemption:
Jack works for a company that makes car accessories. His job is to come up with new ideas for products. He keeps tabs on competitors and does research. Monthly he presents a written report. He is good with what he does so he is paid 1900 a week plus a year-end bonus. He is an exempt employee.
Met earnings requirement and performs at least one duty of an executive or administrator: research and providing advice

This person does not fit within the exemption:
Joan works for a major food market when she is paid 2100 a week to inspect farms based on employers’ definition of organic. She applies employers’ standards and not her own. She is not an exempt employee

Question 23

Outside sales employees

Answer 23

Salespeople who call on current and potential customers
These employees may be exempt

For an outside sales employee to be exempt, both of the following must be true:
- The employee’s primary duty ust be making sales or obtaining orders or contracts for services or the use of facilities
- The employee must regularly work away from your place of business

Typically an exempt sales employee makes ales or takes orders at a customer’s home or business place. A driver who delivers products– and sells them– may be exempt as an outside sales employee

Question 24

The key is whether making sales is the primary duty of the employee. Here are some examples:

Answer 24

This person fits within the exemption -
Jesse works for a distributor of medical devices. She regularly visits doctors and hospital admins to obtain orders for devices. She is an exempt outside sales employee. Her duty is to brain orders for her employer’s products and regularly world away from employer’s place of business

This person does not fit within the exemption -
Jamie works for a distributor of medical devices but spends most of her time in the office replying to calls and emails. Occasionally (once a month) she visits a customer or two. She is not an exempt outside sales employee

Drug company employees who call on doctors are a special case. Sales representatives who are hired to obtain nonbinding commitments from doctors to prescribe their employers’ drugs qualify as outside sales employees, even though these reps don’t make sales or obtain orders for the drugs.

Question 25

Employees in certain computer-related jobs

Answer 25

You don’t have to provide a minimum wage or overtime pay to certain computer workers. To qualify for the computer employee exemption, the employee’s primary duty must consist of one of the following:
- applying systems analysis techniques and procedures
- designing, developing, documenting, analyzing, creating, testing, or modifying computer systems or programs based on design specs
- designing, developing, documenting, analyzing, creating, testing, or modifying computer programs related to machine operating systems; or
- a combination of the above duties, using the same level of skills

This exemption applies if you pay the employee and hourly rate of at least 27.63 or 684 per week

Exemptions for certain computer-related jobs don’t include employees who make a repair computers and related equipment
The exemption also doesn’t include employees who use specialized computer skills but who aren’t primarily engaged in computer systems analysis or programming such as drafters and others skilled in computer-aided design software

Question 26

apprentices

Answer 26

An apprentice is a worker who’s at least 16 years old and who has signed an agreement with you to learn a skilled trade, such as learning to be an electrician or plumber

The next step after working as an apprentice is to become a journeyman:
- The FLSA requires that during the time that someone works for you as an apprentice, their pay must average at least 50% of what you pay journeymen

Question 27

Employees who are exempt from overtime only

A number of employees are exempt from the overtime pay requirements only. You must still pay these employees at least the minimum wage. These employee ares:

Answer 27

• taxicab drivers
• commissioned employees of retail or service establishments, if the employee’s regular rate of pay is more than one and one-half times the minimum wage and if more than half the employee’s pay comes from commissions
• employees who sell cars, trucks, trailers, farm implements, boats, or aircraft if they’re working for a nonmanufacturing business that sells these items to ultimate buyers
• announcers, news editors, and chief engineers of radio and TV stations located in a town or city that has fewer than 100,000 people (or, in some cases, in a town or city that has fewer than 25,000 people)
• movie theater employees
• home health care companions farmworkers (as noted above, workers on some farms are also exempt from the minimum wage requirements), and
• parts clerks and mechanics who service cars, trucks, or farm implements if they’re working for a nonmanufacturing business that sells these items to ultimate buyers. Those who work for manufacturers or midlevel distributors aren’t exempt—for example, a salesperson who works for a distributor that sells farm implements to retail dealers is entitled to overtime pay

Question 28

Paying a minimum wage

Answer 28

You must pay all nonexempt employees at least the minimum wage - 7.25/hr
Federal law allows you to a training wage of 4.25/hr to employees under 20 during their first 90 days on the job
You are not allowed to fire employee just to replace them with young workers
If state minimum wage>federal then you pay state minimum wage

Question 29

Paying overtime - piece rate, hourly rate

Answer 29

FLSA requires you pay nonexempt workers at least one and one-half times their regular rate for all hours worked in excess of 40 in one week
The FLSA does not require you to pay an employee OT simply because they worked more than 9 hours in one day but some states like CA and AK do
Mandated by the week (40 hours)

Question 30

Paying overtime - piece rate

Answer 30

Piece rate - means you pay the worker based on the number or items produced or assembled
- Divide total weekly earning by total number of hours worked that week
-You must pay them the full piecework earnings plus an additional one-half times this regular rate for hours worked over 40

Question 31

Paying overtime - hourly rate

Answer 31

Hourly hate - if they work 40 hours then you pay them at least 1.5 times regular rate for every hour over 30
Salary - to obtain the regular rate of pay for an employee paid a salary for a regular or specified number of hours a week, divide the salary by the number of hours for which the salary is compensation. If salary isn’t paid weekly, you must determine the weekly pay to compute the regular rate and OT

Question 32

equal pay requirements

Answer 32

The equal pay act (part of FLSA) requires you to provide equal pay and benefits to men and women who do the same or equivalent work: work that requires equal skill, effort and responsibility:
- Job titles aren’t decisive in assessing whether two jobs are equal; the work duties are what count
- Illegal to pay janitors more than housekeepers if they’re doing the same job

The equal pay act applies to all employees who are not exempt from the minimum wage requirements. Also applies to executive, administrative and professional employees and outside salespeople.

Question 33

The equal pay act allows pay difference based on:

Answer 33

A seniority system
A merit system
A system that pays a worker based on the quantity or quality of what the worker produces or
Any factor other than the work’s gender (starting salaries, for example, that are based on a worker’s experience level)

• Two jobs are equal for the purposes of the equal pay act when both require the same level of skill, effort and responsibility and performed under similar conditions
• Don’t have to be identical to be equal

Question 34

how to pay employees

Answer 34

The law has rules for how you pay nonexempt employees who are entitled to the minimum wage and requires you pay them in cash or something that is easily converted to cash

Two forms of compensation are tips and commissions:
> Tips
When an employee routinely earns at least 30 a month in tips, the federal law allows you to pay them as little as 2.13 an hour as longas tips bring them to minimum wage level

> Commissions
Commissions that you pay people for sales may take the place of wages for purposes of FLSA. however, the commissions divided by hours worked don’t equal the minimum wage you must make up the difference

FLSA requires that pay period be one month or less, but state laws often require shorter periods such as every two weeks

Question 35

on-call time

Answer 35

You must count as payable time any periods when employees are not actually working ut are required to stay on your premises while waiting for an assignment

If you require employees to be on call but you don’t make them stay on your premises, then two rules apply:
- You don’t count as payable time the on-call time that employees can control and use for their own enjoyment or benefits
- You do count as payable time the on-call time over which employees have little or no control and which they can’t use for their own enjoyment or benefit

You can generally pay different hourly rate for on-call time than you do for regular work time but there is still the minimum wage

Question 36

sleep time

Answer 36

If you require an employee to be on duty at the worksite for less than 24 hours at a time you generally must count as payable any time which the employee is allowed to sleep in a shift of duty

Similarly, if they are at work for 24 hours or more then there is sleep time for payable work time

The way around this is: you and the employee must agree to exclude up to eight hours per day from payable time as sleep and meal
- However if they can not get at least five hours of sleep during the eight-hour sleep-and-eat period or if they end up working that period then those eight hours revert to payable time

Question 37

lectures, meeting and training seminars

Answer 37

Generally, if you want employees to attend these then you have to pay them including any travel time

About the only situation in which you don’t have to pay for the employee’s time is if all of the following are true:
- The employee attends the event outside of regular working hours.
- Attendance is voluntary.
- The instruction session isn’t directly related to the employee’s job.
- The employee doesn’t perform any productive work during the instruction session

Question 38

meal and rest breaks

Answer 38

There are minimum meal and rest breaks under state laws
Whichever has the strict law– FLSA or state– you must abide to the stricter one

You must also provide a nursing mother with reasonable break time to replace breast milk for up to a year after the child’s birth:
The place must be shielded from view and free from intrusion by coworkers and the public; a restroom doesn’t qualify. You don’t have to compensate the employee for this break time, however. Smaller businesses—those with fewer than 50 employees—don’t have to comply with these requirements if doing so would impose an undue hardship, defined as significant expense or difficulty, considering the employer’s size, structure, and resources

Question 39

record keeping requirements

Answer 39

FLSA requires you to keep records of wages and hours for all employees. For nonexempt employees, records must include:

the employee’s name, address, Social Security number, occupation, and gender
the employee’s birth date if the employee is younger than 19 years old
the hour and day when each workweek began
the total hours worked each workday and each workweek
total daily or weekly earnings
regular hourly pay rate for any week when overtime was worked
total overtime pay for the workweek
deductions from or additions to wages
total wages paid each pay period, and
date of payment and pay period covered

Question 40

california meal and rest break laws

Answer 40

All employers in most industries
Esceptions: Motion picture industry work, drivers of property-carrying commercial vehicles and other occupations
Meal break: 30 minutes, unpaid, after 5 hours, except employer and employee can agree to waive meal period if employee works 6 hours or less. Second 30-minute unpaid meal period when employee works more than 10 hours a day, except employer and employee can agree to waive the second meal period if the employee works 12 hours or less and took the first meal period. On-duty paid meal period permitted when nature of work prevents relief from all duties and parties agree in writing
Rest break: paid 10-minute rest period for each 4 hours worked
Breast-feeding: reasonable unpaid breaks. Employers must provide a nice room for employees to breastfeed. Employers with less than 50 employees may qualify for exemption but still make reasonable accommodations

Question 41

Article - FAQ about CA overtime

Answer 41

Eight hours of labor constitutes a day’s work, and employment beyond eight hours in any workday or more than six days in any workweek requires the employee to be compensated for the overtime at not less than:
One and one-half times the employee’s regular rate of pay for all hours worked in excess of eight hours up to and including 12 hours in any workday, and for the first eight hours worked on the seventh consecutive day of work in a workweek; and
Double the employee’s regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.

If you are paid a salary, the regular rate is determined as follows:
Multiply the monthly remuneration by 12 (months) to get the annual salary.
Divide the annual salary by 52 (weeks) to get the weekly salary.
Divide the weekly salary by the number of legal maximum regular hours (40) to get the regular hourly rate.

Q.If an employee works unauthorized overtime is the employer obligated to pay for it?
Yes

Q. Last week I worked Monday, Tuesday, Wednesday, Thursday and Saturday, eight hours each day. I was out ill all day Friday. For the workweek I was paid 48 hours at my regular hourly rate. Am I entitled to eight hours of overtime pay?
No, you are not entitled to any overtime pay. Overtime is calculated based on hours actually worked, and you worked only 40 hours during the workweek

Question 42

Article - Independent contractor versus employee

Answer 42

Q. What is the ABC test?

A. Under the ABC test, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Question 43

(1) Executive Exemption. A person employed in an executive capacity means any employee:

Answer 43

(a) Whose duties and responsibilities involve the management of the enterprise in which he/she is employed or of a customarily recognized department or subdivision thereof; and
(b) Who customarily and regularly directs the work of two or more other employees therein; and
(c) Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; and
(d) Who customarily and regularly exercises discretion and independent judgment; and
(e) Who is primarily engaged in duties which meet the test of the exemption. The activities constituting exempt work and nonexempt work shall be construed in the same manner as such items are construed in the following regulations under the Fair Labor Standards Act effective as of the date of this order

Question 44

(2) Administrative Exemption. A person employed in an administrative capacity means any employee:

Answer 44

(a) Whose duties and responsibilities involve either:
(i) The performance of office or non-manual work directly related to management policies or general business operations of his/her employer or his/her employer’s customers; or
(ii) The performance of functions in the administration of a school system, or educational establishment or institution, or of a department or subdivision thereof, in work directly related to the academic instruction or training carried on therein; and
(b) Who customarily and regularly exercises discretion and independent judgment; and
(c) Who regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity (as such terms are defined for purposes of this section); or
(d) Who performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or
(e) Who executes under only general supervision special assignments and tasks; and
(f) Who is primarily engaged in duties that meet the test of the exemption. The activities constituting exempt work and nonexempt work shall be construed in the same manner as such terms are construed in the following regulations under the Fair Labor Standards Act effective as of the date of this order:
g) Such employee must also earn a monthly salary equivalent to no less than two (2) times the state minimum wage for fulltime employment. Full-time employment is defined in Labor Code Section 515(c) as 40 hours per week.

Question 45

(3) Professional Exemption. A person employed in a professional capacity means any employee who meets all of the following requirements:

Answer 45

—1 (a) Who is licensed or certified by the State of California and is primarily engaged in the practice of one of the following recognized professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; or
(b) Who is primarily engaged in an occupation commonly recognized as a learned or artistic profession. For the purposes of this subsection, ―learned or artistic profession‖ means an employee who is primarily engaged in the performance of:
(i) Work requiring knowledge of an advanced type in a field or science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes, or work that is an essential part of or necessarily incident to any of the above work; or
(ii) Work that is original and creative in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the above work; and
(iii) Whose work is predominantly intellectual and varied in character (as opposed to routine mental, manual, mechanical, or physical work) and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.
(c) Who customarily and regularly exercises discretion and independent judgment in the performance of duties set forth in subparagraphs (a) and (b).
(d) Who earns a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment. Full-time employment is defined in Labor Code Section 515 (c) as 40 hours per week.
(e) Subparagraph (b) above is intended to be construed in accordance with the following provisions of federal law as they existed

Question 46

Article - Salaried Workers Entitled to Overtime Pay Unless Exempt

Answer 46

An employee does not qualify under any of these exemptions unless the employee:
(1) earns a monthly salary at least twice the state minimum wage for full-time employment;
(2) spends more than half of his or her work time engaged in duties that meet the test for the particular exemption; and
(3) “regularly exercises discretion and independent judgment in performing those duties.”

Each classification also has distinct elements.
- To fall under the executive exemption, the employee must, among other things, be involved in company management, regularly direct the work of at least two people, and have a significant say in hiring, firing, and promotional decisions.
- A distinct feature of an administrative exempt employee is the regular performance of office or non-manual work directly related to the employer’s management policies or general business operations.
- Professional employees hold professional licenses from the state of California in such professions as law, medicine, and accounting, or are primarily engaged in work in a commonly recognized “learned or artistic profession,” such as one “requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction.”

Question 47

Article - On the road again: Compensating work-related travel

Answer 47

Non-exempt employees must be compensated for employer-mandated travel time:
Employees exempt from overtime rules, such as executives, professionals, and high level administrators, are paid a set salary of at least twice the state hourly minimum wage to perform their duties, however long it takes. They are not entitled to extra compensation for traveling on business.
Under the governing state wage orders, non-exempt employees, whether paid by the hour or by salary, are entitled to be paid for all “hours worked,” including “the time during which an employee is subject to the control of an employer. …” That includes time spent on employer-mandated travel

Employer may establish lower rate of compensation for travel before it occurs:
The DLSE allows an employer, by policy or contract, to “establish a separate rate for travel before the work is performed, provided that no rate of pay can fall below the state minimum wage. Under state law, the obligation to pay no less than the minimum wage attaches to each separate hour, or part of each hour worked.”

Question 48

(SKIT): The case of heigh ho, heigh ho, it’s off to work we go

Answer 48

Context: It is August 23, 1999. Bobby Overton, a security guard at Disneyland whose shift is about to start, just boarded the shuttle bus at the Katella Avenue employee lot where he parks his car. The shuttle will take him to Harbor Pointe, one of several employee entrances to the park. The shuttle driver is a considerable distance away, as it is a long vehicle with many cars. Sitting on either side of Bobby in the bus are Jane Gomez, who plays the Snow White dwarf “Happy” at the park, and Warren Sanchez, who plays “Grumpy.” Jane speaks all her lines in a cheery manner; Warren speaks his in a sour manner.

Legal question: Is Disney required to pay employees for their travel time on the shuttle?

Outcome: Court sided with Disney (No). Employee appealed and lost again.

Discussion:
Disney is mandating to park in that parking lot and designating employees to park there specifically
Commuting time vs shuttle time
The shuttle is a perk/accommodation anyway
Offers extra pay for clean transportation
There are alternatives so it’s hard to say they’re forcing anything
Other questions to think about: Can disney classify tram drivers as independent contractors?
No - ABC Test - flunk control test (uniform and route)
They could be if the company doesn’t own their equipment, IC have more control over their route and schedule and no uniform
Are the employees required to take the buses and prohibited from taking other transportation?
No. There are other options to get to work/the gate.
Required parking lot only if you drive not for every mode of transportation
Handout 3
They didn’t have to pick up their uniforms there so they don’t get paid for the commute from the shuttle to the park

Question 49

ON QUIZ - handout 1 - PROPER CLASSIFICATION OF WORKER

Answer 49

Under California law, a worker is presumed to be an employee of the hiring entity .
A worker is “employed” by the hiring entity if the hiring entity suffers or permits the worker to work. Under the suffer or permit to work standard, an individual worker who has been hired by an company can properly be viewed as an independent contractor not covered by the otherwise applicable wage order if the worker is the type of traditional independent contractor – such as an independent contractor such as an electrician – who would not reasonably have been viewed as working in the hiring business . Such an individual is realistically understood, instead, as working only in his or her own independent business.
A worker is treated as an employee and not an independent contractor under the wage order unless the hiring entity proves that:
(A) The worker is free from the type and degree of control and direction the hiring entity typically exercises over its employees in performing the work, both under the contract and in fact and
(B) The worker performs work that is outside the usual course of the hiring entity’s business, and whose work therefore would not ordinarily be viewed by others as working in the hiring entity’s business and
(C) The worker is customarily engaged in an independently established trade , occupation, or business, generally taking such steps to establish and promote an independent business as incorporation, getting a business or trade license, or advertisement. It is not sufficient to establish that a worker has independently made the decision to go into business for himself or herself that the company does not prohibit or prevent a worker from engaging in such an independent business. In addition, the label the hiring entity places on the relationship carries little weight.
This is called the ABC test.

Question 50

handout 2

Answer 50

“Hours worked” defined: California law

“Hours worked” for which a nonexempt employee must be compensated means the time during which an employee is subject to the control of the employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.

(IWC Wage Order No. 4-2001, ¶2(K).)

“Hours worked” defined: Federal law

All time during which an employee is required to be on duty or to be on the employer’s premises or at a prescribed workplace and (b) all time during which an employee is suffered or permitted to work whether or not he is required to do so.

Factors considered in determining whether “on-call” or “stand-by” time is compensable

The bottom line consideration is the amount of control exercised by the employer over the activities of the worker. Factors used to determine whether that exists are: (1) geographical restrictions on employees’ movement; (2) required response time; (3) nature of the employment; and (4) the extent the employer’s policy would affect personal activities during on-call time; (5) whether the parties have an agreement as to how such time will be treated.

Restrictions on the use of alcohol are not enough to make on-call time compensable. In addition, on-call time may be compensated at a different rate of pay from the regular rate of pay as long as the on-call rate is at least equal to the (state) minimum wage.

Question 51

handout 3

Answer 51

Portal-to-Portal Act under the federal Fair Labor Standards Act (“FLSA”)

An employer need not compensate its employees for: (1) walking, riding, or traveling to and from the actual place of performance of the principal activities which such employee is employed to perform, and (2) activities which are before or after to such principal activities. Thus, ordinary travel from home to work, which is a normal part of employment, is not compensable under the federal law.

Whether employees must be compensated while taking employer-provided transportation to the work site under California law

When an employer requires its employees to meet at designated places to take its buses to work and prohibits them from taking their own transportation, these employees are “subject to the control of the employer” and their time spent traveling on the buses is compensated as “hours worked.”

Question 52

(SKIT): The case of by the numbers

Answer 52

Context: It is Friday, September 22, 2006. Sarah Fernandez, a former staff accountant with Ernst & Young, is having coffee at a Starbucks in San Diego with her former mentor, Rachel Stern, a partner in the Oakland office of E&Y where Sarah worked. Rachel is in town to see a client in San Diego on business and Sarah relocated here after losing her job at the firm.

Legal Question: Is Sarah an exempt employee or does E&Y owe her overtime pay? Was she properly classified as exempt?

Outcome: Individual variables. Settlement for her individual claim. It’s a toss up :/

Discussion:
She was laid off
Tardiness and performance issues
Sarah argues she is nonexempt and is owed OT because she did not use personal judgment in her position so she is not an exempt employee
Rachel stated she is a well paid professional and that she was independent in her work as she used her judgment in management policies with E&Y’s client
Sarah said she just verified stuff and she was under E and Y’s judgment
Her vegas trip was just her watching over employees but it was mind numbing work watching people count cash
She wasn’t given any responsibility
Rachel argues that she was goofing off and was not fulfilling what EY expected to do and that would have made her exempt
Accountant = learned professional
Only if she was doing learning professional things
Was she?
Huge responsibility in Vegas trip
Specialized knowledge
Who is primarily engaged in duties that meet the test of the exemption. The work actually performed by the employee must be examined and the amount of time the employee spends on such work, together with the employer’s realistic expectations and the realistic requirements of the job to determine if this exemption is satisfied.
Were they expecting her to do this?
In reality, she did not do this
What about her auditor work?
Sophisticated

Question 53

handout 4 - Categories of Exemptions from Overtime Pay and Certain Other Requirements of Wage Order

Answer 53

Executive Exemption: Any employee
· Whose duties and responsibilities involve the management of the enterprise or of a customarily recognized department or subdivision thereof; and
· Who regularly directs the work of at least two employees; and
· Who has the authority to hire and fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees is given particular weight; and
· Who customarily and regularly exercises discretion and independent judgment; and
· Who is primarily (in CA, 51% or more of time) engaged in duties that meet the test of the exemption. The work actually performed by the employee must be examined and the amount of time the employee spends on such work, together with the employer’s realistic expectations and the realistic requirement of the job to determine if this exemption is satisfied.
· An employee must earn a monthly salary no less than twice the state minimum wage for full-time employment, which with an hourly minimum wage of $16, means a yearly salary of at least $66,560. Note: The 2024 minimum wage for work done in City of San Diego is $16.85, but the exempt rate is determined by the state minimum wage, not by local city minimum wages.
B. Administrative Exemption: Any employee:
· Whose duties and responsibilities involve the performance of office or non-manual work directly related to management policies or general business operations of the employer or the employer’s customers; and
· Who customarily and regularly exercises discretion and independent judgment; and
· Who regularly and directly assist a proprietor, or an employee employed in a bona fide executive or administrative capacity; or
· Who performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or
· Who executes under only general supervision special assignments and tasks; and
· Who is primarily engaged in duties that meet the test of the exemption. The work actually performed by the employee must be examined and the amount of time the employee spends on such work, together with the employer’s realistic expectations and the realistic requirements of the job to determine if this exemption is satisfied.
· An employee must earn a monthly salary no less than na the state na for full-time employment, which with an hourly minimum wage of $na, means a yearly salary of at least $na.
C. Professional/ Creative Exemption: Any employee:
· Who is licensed or ceritified by the State of California and is primarily engaged in the practice of one of the following recognized professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; or
· Who is primarily engaged in an occupation recognized as a learned or artistic profession. That means an employee who is primarily engaged in the performance of: (i) work requiring knowledge of an advanced type in a field of science or learning customarily acquired by prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship; or (ii) work that is original and created in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination, or talent of the employee; and
· Whose work is predominantly intellectual and varied in character and cannot be standardized.
· Who customarily and regularly exercises discretion and independent judgment in the performance of these duties; and
· Who earns a monthly salary no less than na the state na for full-time employment, which with an hourly minimum wage of $na, means a yearly salary of at least $na.
D. Other Exemptions
· Employees in the computer software field if certain requirements are met.
· Outside sales people..