Administrative Exemption Under California Labor law
The is one of the most disputed exemptions under California law due to its ambiguity. The question is usually whether or not the employee should be compensated for overtime or if they are properly classified as exempt from overtime. California courts have examined the Administrative Exemption under the Federal Labor Standards Act (FLSA).
Bell v. Farmers Ins. Exchange (2001) is a noteworthy case in which the courts reviewed whether or not the employees met the requirements to be considered exempt from overtime. First the minimum requirement rate of salary must be met. Then the administrative work must be:
(1) non-manual
(2) related to management policies or general business operations of the employer or the employer’s customers
(3) must involve the customary and regular exercise of discretion and independent judgment
The stipulation “directly related to management policies and general operations of the employer or the employer’s customers” is often the key requirement that is scrutinized most due to its expansive nature. But more often than not, California courts reject the argument often made by employers that “management policies and general operations” must be interpreted broadly and it applies to any employee who exercises minimal discretion in his work. The California Court’s interpretation of the language in this stipulation is much more focused.
The interpretation has been published in the decision in Bratt v. County of Los Angeles (1990) to mean directly related to management policies or general business operations, as in running of the business and not merely the day to day carrying out of its affairs. The Bratt Court considered whether the county probation officers are exempt from overtime under administrative exemption. The court concluded that although probation officers provide recommendations to the courts, these recommendations do not involve advice on the proper way to conduct the business of the court, but merely provide information which the court uses in the course of its daily production activities. So it was decided that the tasks the employees preformed did not meet the requirement to be exempt from overtime under the Administrative Exemption
If you are concerned that you might be improperly classified as exempt from overtime, you should contact an experienced California Labor law Attorney and have them examine your job duties. You could be owed a substantial sum of money in overtime back pay.
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