Misclassified ‘salaried’ employees who work long hours entitled to back wages

Aaron Kudatsky worked as an implementation consultant in California for Tyler Technologies, a company that sells business and public sector operations software being used in finance, payroll, billing, and others. Tyler’s implementation consultants assist its clients in customization and training in the use of Tyler’s products. The implementation consultants are classified as exempt and are salaried employees. Kudatsky often worked more than eight hours per day.

Kudatsky sued the company claiming that he and other implementation consultants were misclassified as exempt employees and were, therefore, not paid overtime for work of more than 8 hours in a day.

Under California law, employees are entitled to overtime pay for any work in excess of eight hours in one workday, or 40 hours in any one workweek. Employees are exempt from overtime pay only if they fall within very specific exemptions.

Executive Exemption

For executive exemption to apply, an employee must be: (1) paid at least twice the state’s minimum wage for full time employment; (2) assigned as primary function the management of the business; (3) responsible for regularly directing the work of 2 or more subordinates; (4) has the authority to hire, fire, give pay treatment or recommend such actions; (5) regularly and customarily exercises discretionary powers; and (6) devotes less than 50% of work time to non-managerial duties.

Administrative Exemption

To fall under the administrative exemption, an employee must be: (1) paid at least twice the state’s minimum wage for full time employment; (2) charged with the performance of office or non-manual work directly related to management policies or general business operations; (3) regularly exercises discretionary and independent judgment; (4) regularly assists a proprietor or an executive or administrative employee; and (5) works only under general supervision on special or technical assignments and tasks.

Professional Exemption

Employees exempt under the professional exemption must be: (1) engaged in work which is primarily intellectual, artistic, creative or requiring advanced knowledge; (2) assigned a job that requires the exercise of discretion and independent judgment.; (3) paid at least twice the state’s minimum wage for full time employment; (4) licensed or certified by the State and engaged in the practice of law, medicine, dentistry, pharmacy, optometry, architecture, engineering, teaching, or accounting (or engaged in a learned or artistic professions).

If an employee’s primary duties involve day-to-day tasks that are not directly related to management policies or general business operations, then these employees may simply be engaged in production work, not administrative work. If so, then they should be entitled to overtime pay for work beyond 8 hours per day or 40 hours per week.

Overtime exemption also applies to some very highly paid and highly skilled professional computer employees even if they are paid on an hourly basis. But, the following computer professionals have to be paid overtime because they are not exempt:

• Those who work on computer-related tasks but have not attained the skill and expertise necessary to work independently and without close supervision
• Those who operate computers or in the manufacture, repair, or maintenance of computer hardware and related equipment
• Those who are skilled in computer-aided design software but who are not working as computer systems analysts or programmers
• Those who write computer-related materials intended to be read by customers, subscribers, or other users of the computer media

Rather than proceed to trial, the parties agreed to settle the case upon payment by Tyler Technologies of $3.1 million to the class. Approximately 300 employees will benefit from the settlement.

The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com. [For more than 25 years, C. Joe Sayas, Jr., Esq. successfully recovered wages and other monetary damages for thousands of employees and consumers. He was named Top Labor & Employment Attorney in California by the Daily Journal, consistently selected as Super Lawyer by the Los Angeles Magazine, and is a past Presidential Awardee for Outstanding Filipino Overseas.]