Employee Exemption Defined

Exempt Status: An employee is considered administratively exempt from overtime wages under California Industrial Welfare Commission Order No. 1-2001 if he:

1. performs non-manual work directly related to management policies or general business operations of his employer or its customers;
2. customarily and regularly exercises discretion and independent judgment;
3. performs special assignments and tasks or works along specialized or technical lines requiring special training, experience or knowledge under only general supervision;
4. is primarily engaged in duties that meet test of exemption; and
5. earns monthly salary equivalent to no less than two times state minimum wage full-time employment.

(In re United Parcel Service Wage and Hour Cases (2010) 190 Cal.App.4th 1001, 1051; CACI 2721.)

In determining whether an employee performs administrative duties more than half the time, two important factors include:

1. how he actually spends his time; and
2. whether the employee’s practice differs from the employer’s realistic expectations of how he should spend his time and the realistic expectations of the job.

(Id.)

The burden of proof as to the validity of the exemption is on the party claiming the exemption. (CCP Sec. 720.360.)

Exemption and Agriculture Occupations

Wage Order 14, which governs overtime exemptions for agricultural occupations, which states than exempt employee is one who is engaged in work which is primarily intellectual, managerial, or creative, and which requires exercise of discretion and independent judgment. (Cal. Code Regs., tit. 8, Sec. 11140(2)(D).) It states that “primarily” means more than one-half of the employee’s work time. (Id. at subd. 2(K).) Exemptions from overtime provisions are narrowly construed, and an assertion of an exemption from the overtime laws is considered to be an affirmative defense, which the employer bears the burden of proving. (Ramirez v. Yosemite Water Co. (1999) 20 Cal. 4th 785, 794.)

Exemption as Affirmative Defense

“[T]he assertion of an exemption from the overtime laws is considered to be an affirmative defense, and therefore the employer bears the burden of proving the employee's exemption.” (Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 789 at 794–795; accord, Nordquist v. McGraw-Hill Broadcasting Co. (1995) 32 Cal.App.4th 555, stating that an “employer bears the burden of proving an employee is exempt.”; Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 338.)

Courts in overtime exemption cases must proceed through analysis of the employer's realistic expectations and classification of tasks rather than asking the employee to identify in retrospect whether, at a particular time, he or she was engaged in an exempt or nonexempt task. (Martinez v. Joe's Crab Shack Holdings (2014) 231 Cal.App.4th 362, 382.)

Collective Bargaining Agreements (CBAS) and Exemptions

In order for the CBA exemptions to apply, there must be a valid collective bargaining agreement that expressly provides for:

1. the wages, hours and working conditions of the employees,
2. premium wage rates for all overtime hours worked, and
3. a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.

Labor Code Sections 512 and 514

In Kilbourne v. Coca-Cola Company (S.D. Cal. 2014) 2014 WL 11397891, at *6, the plaintiff argued that because he routinely worked through his 30-minute lunch period, he was not paid the overtime compensation to which he was entitled, and therefore the CBA did not provide premium wage rates for all hours worked. However, the court held that pursuant to Labor Code §514, the CBA is what determines when an employee works overtime hours and is entitled to compensation, and because the CBA at issue provide for the payment of premium wages, the defendant was entitled to summary judgment. (Id. at *7-9.) There the court relied on Vranish v. Exxon Mobil Corporation (2014) 223 Cal.App.4th 103, 111, which provided the following rationale supporting the CBA overtime exemption:

Employees, such as plaintiffs, represented by a labor union, “have sought and received alternative wage protections through the collective bargaining process.” (Firestone v. Southern California Gas Co. (9th Cir.2000) 219 F.3d 1063, 1067.) When there is a valid collective bargaining agreement, “[e]mployees and employers are free to bargain over not only the rate of overtime pay, but also when overtime pay will begin. Moreover, employees and employers are free to bargain over not only the timing of when overtime pay begins within a particular day, but also the timing within a given week. The Legislature did not pick and choose which pieces of subparagraph (a) will apply or not apply. Instead, the Legislature made a categorical statement that ‘the requirements of this section,’ meaning this section as a whole, do not apply to employees with valid collective bargaining agreements.” (Wylie v. Foss Maritime Co. (N.D.Cal., Sept. 4, 2008, No. C–06–7228–MHP) 2008 WL 4104304, *17, 2008 U.S. Dist. Lexis 76607, *49.)

Enforcement of Judgment Against Employers

Pursuant to Cal. Labor Code Sec. 96.8, the California State Labor Commissioner is empowered to enforce judgments on behalf of employees against their employers, by levying the employers’ property as otherwise described in CCP Sec. 700.140 et seq. A judgment debtor subject to such a levy may thereafter seek an exemption, as provided for in CCP Sec. 703.020 et seq.