A move from a job that pays an hourly wage to a salaried position is a big one for most people. Salaried employees have always been viewed as having more “important” jobs. The security of a consistent amount of take-home pay can also be a financial relief.
Yet, there are some perceived drawbacks to salaried work. Many people believe that only hourly employees are entitled to overtime pay (time-and-a-half) for working over 40 hours a week or 8 hours a day. Salaried workers may be expected to come in early, stay late and work through lunch without additional compensation. However, that’s not the case for all salaried employees.
The term “manager” is often misused
According to federal law, salaried workers whose annual salary is less than approximately $35,500 are entitled to overtime pay unless they’re considered to be managers. That gives a lot of leeway to employers to get out of paying overtime. It’s easy enough to stick the word “manager” or something comparable in a title and claim that an employee is a manager when, in fact, they have no actual authority.
Workers who have been classified as managers often perform basically the same jobs as hourly employees – particularly if a business is short-staffed. Mislabeling most often occurs in industries like retail, restaurants, janitorial and even banking where salaries aren’t known for being high. However, it can occur anywhere.
Some employees have pushed back – and won. For example, a franchise of Panera paid a multimillion-dollar settlement to hundreds of “assistant managers” for failure to pay them overtime. Individuals have won settlements after going up against other employers. One man won a settlement against a Dunkin’ Donuts franchise. However, since many employees are bound by arbitration agreements, the number of lawsuits doesn’t reflect the seriousness of the problem.
What does California law say?
Many states, including California, have their own exemption limits for salaried employees. Most are higher than the federal limits. As of 2023, that limit in California is an annual salary of approximately $64,500. There are different limits for employees who work in the computer software field.
It’s important for employees to understand that this mislabeling of salaried jobs by employers to reduce their costs is a very real and widespread problem. If you believe your position was mislabeled and that you deserve to be paid overtime for your long hours, it may be wise to seek legal guidance to learn more about your rights and the law.