By Betsy Johnson
On April 1, 2010, the Department of Labor (DOL) launched its “We Can Help” public awareness campaigned aimed at educating workers about their rights under the Fair Labor Standards Act (FLSA). The DOL set up a dedicated website for the “We Can Help” campaign (http://www.dol.gov/wecanhelp/) which provides guidance to employees who wish to file a complaint against their employers for FLSA violations.
On April 26, 2010, the DOL announced a new, enhanced, regulatory and enforcement strategy called “Plan/Prevent/Protect” (http://www.dol.gov/regulations/2010RegNarrative.htm). This new strategy is designed to promote a “safe, secure, and equitable” workplace for all employees and leverages DOL resources across the spectrum of DOL worker protection agencies, including the Wage and Hour Division, and will focus on employer compliance with the laws enforced by the DOL.
Given the spotlight placed on employee education and employer compliance by these DOL initiatives, companies are likely to see an increase in DOL and state agency enforcement proceedings and an increase in individual civil actions and class action litigation involving wage and hour claims for the foreseeable future.
California continues to be at the forefront of the wage and hour litigation wars, and the issue of the proper classification of employees as “exempt” or “non-exempt” remains an active battleground in the state and federal courts, as well as in proceedings before the California Division of Labor Standards Enforcement (DLSE).
It should come as no surprise to most human resource professionals and in-house counsel that California utilizes a different test for determining the “white collar” exemptions (executive, professional and administrative) than is utilized under the FLSA. However, employers who are unaware of or ignore the differences between California law and the FLSA regarding the “white collar” exemptions are exposing their companies to significant liability for unpaid overtime, “off the clock” work, meal/rest periods, uniform violations, improper deductions and record keeping violations under California law.
Under both the FLSA and California law, the employer has the burden of proving the one of the exemptions applies—establishing exempt status is an “affirmative defense” in wage/hour litigation. Walling v. General Industries Co., 330 U.S. 545, 67 S.Ct. 883 (1947). Job titles are immaterial to a determination of exempt status. Therefore, we recommend that employers conduct an internal “audit” of the actual job functions of the employees in question before classifying them as “exempt,” under either the FLSA or California law.
Recently, a client asked us to develop a “user friendly” comparison of the FLSA and California “white collar” exemptions. While nothing is really “user friendly” when it comes to California wage and hour law, we developed the chart below to provide some basic guidance for our client and wish to share it here.
Important Note: Where the California statutory, regulatory or case law are more employee-favorable than the FLSA (which is most cases), the California rules will apply.
| FLSA | CALIFORNIA | |
| “Salary Basis Test” Minimum fixed, guaranteed salary for exempt status |
$455 per wk ($23,660/yr) 29 CFR 541.600 FLSA regulations are available at: http://www.dol.gov/dol/allcfr/ DOL (WHD) Rulings and Interpretations are available at: |
$640 per wk, $2,7733.33 per mo or $33,280 per yr California Labor Code (LC) §515 and Wage Orders Labor Code is available at: http://www.leginfo.ca.gov/cgi-bin/ Wage Orders are available at: http://www.dir.ca.gov/iwc/ For 2010-Computer professionals must earn a minimum fixed salary of $79,587.50 per year or $37.94 per hours for all hours worked. Salary and hourly rate subject to change each year. LC §515.5 and Wage Orders For 2010-Physicians who are paid on an hourly basis must be paid a minimum of $69.13 per hour. Hourly rate subject to change each year. LC §515.6 and Wage Orders |
| “Duties Test”
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The “primary duty” of a exempt employee must fall with in the FLSA definition of exempt duties. Exempt employees must be perform exempt duties at least 50% of the time.
The FLSA uses a “qualitative” test 29 CFR 541, et seq. |
An exempt employee must be “primarily engaged in” job duties which meet the test for the exemption. Under the CA requirement, exempt employees must perform exempt job duties (as defined by the DLSE and case law) more than 50% of the time CA uses a “quantitative” test Wage Orders and case law A summary of the “duties test” for the CA exemptions is available at: http://www.dir.ca.gov/dlse/
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| Highly- compensated employees | Employees paid $100,000/yr exempt if meet streamlined duties test |
No similar exemption Cannot use in CA |
| "Safe Harbor" | Provides "window of correction" for employer if improper deductions made from exempt employee paychecks |
No guaranteed "safe harbor" under CA law, but should still a use it to obtain federal protection CA has very strict rules re: permissible and impermissible salary deductions LC §§221, 224 and Wage Orders Recent opinion letters from DLSE are more favorable for employers on issues like furloughs and salary reductions and apportionment of paid time for partial day absences DLSE Opinion Letters are available at: |
| Permissible salary deductions | Now allows full-day deductions for unpaid suspension based on violation of any conduct rules, and for violations of major safety rules, and full or partial-day deductions for unpaid FMLA |
No similar provision for disciplinary deductions, except for full or partial day deductions for unpaid FMLA CA has very strict rules re: permissible and impermissible salary deductions LC §§221, 224 and Wage Orders Recent opinion letters from DLSE are more favorable for employers on issues like furloughs and salary reductions and apportionment of paid time for partial day absences DLSE Opinion Letters are available at: |