An hourly, non-exempt employee whose duties may make him eligible to be classified as an exempt administrative employee, is demanding to be classified as exempt. Are we required to change his classification?

No, an employer is not obligated to classify employees as exempt. In California, depending upon the exemption, employees may be exempt only from overtime or from Sections 3-12 of the Industrial Welfare Commission orders.

The use of these exemptions is simply available to the employer; nothing in the law requires an employer to utilize an exemption. On the contrary, misclassifying an employee as exempt who is not can be a very costly error.

Specific Criteria

The law outlines the specific criteria required for the exempt classifications. Employers should establish that each and every criterion is met in order to correctly classify employees as exempt. Ultimately, the burden lies with the employer to defend the decision.

Employees frequently view an exempt classification as a promotion even if the wage is commensurate with an hourly position. As a result, employees are willing to trade overtime compensation for the perceived status or prestige of an exempt position. Carefully consider employee requests before taking an action that may be hard to defend and may result in a substantial overtime obligation later.

Status Irrelevant

There are a few laws that apply to the duties of an employee irrespective of their classification status. For example, the fact that an employee is not actually classified as an “exempt” supervisor will not affect the obligation to provide any required training. Mandated tip pooling prohibitions may apply if the employee is an agent of the employer who hires, fires and disciplines employees.