Avoid Costly Exempt vs. Non-Exempt Employee Classification Errors


With the increases in minimum wage taking effect on January 1, 2017 California employers (and minimum wage increases in 12 other states as well), it’s a good time to review all of your employees to ensure they are not mis-classified between exempt and non-exempt.  If you get this wrong, it exposes your non-profit to unpaid wages and interest, liquidated damages, attorney’s fees and court costs and possibly a willful violation penalty including fines and imprisonment.  Missionwell can help you with this review – please call our Customer Service Manager at 626-578-0001 extension 114 to discuss this or related services. 

“Exempt” and “Non-exempt” refer to the exemption from paying overtime, not to an employee’s status as hourly vs. salaried, or full time vs. part time.  Among many other requirements, employees in California must now earn the equivalent of $20/hour (or twice the state minimum wage) to be classified as exempt from overtime.  For a full time, salaried employee, that is the equivalent of $41,600 salary annually.  Keep in mind that wage and salary rates for exemption from overtime vary significantly from state to state.  Our new Head of HR Services, Kenny Ahn, can assist you in understanding the rules in your state.