Classification of employees as exempt or non-exempt is a complicated area of the law.  Employers often place too much weight on the skill or experience required for a job when classifying employees as exempt.  Employers may also base their classifications on written job descriptions that do not accurately describe what employees spend the majority of their time doing.  This is a particular pitfall in California, because an exempt employee must be “primarily engaged” in exempt duties, meaning that they spend more than half their time on exempt duties.  Therefore, while a written job description may accurately describe an exempt duty such as supervision as being particularly important, the employee may actually spend the majority of his or her day performing non-exempt routine manual tasks.

Performing an audit by interviewing employees (or their immediate supervisors) is often the best way to determine how employees spend their working day.   An employee can be asked to describe an actual day’s work, or to describe a typical week, and to assign percentages to the activities performed.  Employees themselves often mischaracterize the nature of their work.  Modest employees may downplay the learned knowledge needed for certain functions, while other employees may overemphasize their independence.  It is therefore important to determine what the employee actually does, not how he or she characterizes it. 

We have conducted audits and found misclassified employees.  Unfortunately for employers, employees are often misclassified as exempt.  However, in one recent audit, we discovered that employees who appeared (based on their written job descriptions) to be non-exempt could be classified as exempt.  This discovery gave the employer significant flexibility with respect to scheduling. 

Finally, audits should be performed by an attorney.  When performed by an attorney, the audit documents will be protected by the attorney-client privilege.  Costco Wholesale Corp. v. Sup. Ct. (Randall) (2009) 47 Cal.4th 725.  Should litigation arise, the employee generally will not be able to obtain copies of the audits.  If the audit is conducted by a non-attorney, and a dispute later arises, the employee may obtain copies of the audits and use them to show willfulness or knowledge on the part of the employer that the employee was misclassified. 

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