One of the most common mistakes employers make is misclassifying an hourly worker as an exempt employee. “To be exempt in California, you have to meet two tests: a salary test and a duties test,” says Shaw.
According to California labor laws, salary means the employee’s pay is “not subject to variation based on the quality or quantity of work,” Shaw tells Frank.
When employees are exempt, the employer does not pay overtime, but the exempt employee has more independence than an hourly employee. “Many employees want to be exempt because they don’t have to clock in and out, they can take a longer lunch, they can come and go as they please, and they are still getting the same amount of pay,” adds Frank.Read More and Watch the Podcast