Wondering if you are an exempt employee? Take the quiz!
T he California Wage Orders define exempt Professionals as follows:
Professional Exemption. A person employed in a professional capacity means any employee who meets all of the following requirements:
(a) Who is licensed or certified by the State of California and is primarily engaged in the practice of one of the following recognized professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; or
(b) Who is primarily engaged in an occupation commonly recognized as a learned or artistic profession. For the purposes of this subsection, “learned or artistic profession” means an employee who is primarily engaged in the performance of:
(i) Work requiring knowledge of an advanced type in a field or science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes, or work that is an essential part of or necessarily incident to any of the above work; or
(ii) Work that is original and creative in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the above work; and
(iii) Whose work is predominantly intellectual and varied in character (as opposed to routine mental, manual, mechanical, or physical work) and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.
(c) Who customarily and regularly exercises discretion and independent judgment in the performance of duties set forth in paragraph (a).
(d) Who earns a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment. Full-time employment is defined in Labor Code Section 515 (c) as 40 hours per week.
Let’s break that down. There are three requirements:
1. You are employed and licensed in one of the listed categories or you are engaged in a “learned or artistic profession,” and
2. You customarily and regularly exercise discretion and independent judgment in the performance of your job, and
3. You earn at least two times California minimum wage a week (i.e., as of September 2014, $720 per week, which will increase to $800 per week on January 1, 2016).
Licensed or Unlicensed; Does it Matter?
A string of cases in 2011 confirmed that while the Wage Orders define specific professions, unlicensed employees who perform similar jobs, such as unlicensed accountants or law clerks, can also be exempt as engaged in a “learned or artistic” profession if their job duties fit within subparts (i) or (ii) of the above. “Learned” professions are jobs “requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study as distinguished from a general academic education and from an apprenticeship and from training in the performance of routine mental, manual, or physical processes.” Typical examples of “specialized intellectual instruction” include law, medicine, architecture, engineering, and other fields with specialized academic degrees. I.e., anything requiring more than a high school diploma. While a degree is not an absolute prerequisite for the individual employee, if the position is of the type that does not generally require an advanced degree, the position is not exempt. For example, even if you have been performing engineer-like duties for 20 years, and you design complicated valves for oil rigs with little or no supervision, if the position requires nothing more than a high school diploma, it is not exempt. (See Young v. Cooper Cameron Corp. (2d Cir. 2009) 586 F.3d 201.) The take-away is thus that subpart (i) requires both advanced duties and a position that “customarily” requires an advanced degree.
The second category of the professional exemption covers artists, musicians, cartoonists, designers, actors, writers, and other professions whose work requires invention, creativity, originality, talent, and imagination. The less creativity the worker brings to the job, and the more control the employer imposes on the final result, the less likely the job is actually exempt. For example, consider the difference between a journalist and a reporter. A reporter may be tasked with fact gathering and documenting events in a narrative format, with editorial control of the final product maintained by a supervising editor. A journalist, on the other hand,
may not only gather facts, but may additionally interpret them for the reader, offer opinion on the facts as presented, or in other ways maintain control over the presentation of information in a certain way such that the final end result is mostly dependent on the journalist’s own talent and creativity. Another example might be a fashion designer versus someone who creates the individual pieces of clothing designed by someone else. It might take a lot of skill to make an intricately designed shirt or belt or pair of pants, but the if the design of the clothing was made by someone else, the person making the clothes is not exempt; the fashion designer is.
Discretion of Independent Judgment.
This is a frequent area of litigation in misclassification cases. For one, “discretion and independent judgment” must be used on “matters of significance,” as opposed to the myriad routine decisions every employee makes every day that requires discretion and independent judgment. Simply deciding to do a project tomorrow rather than today does not satisfy this part of the exemption. Instead, you should consider the following factors:
- whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices;
- whether the employee carries out major assignments in conducting the operations of the business;
- whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business;
- whether the employee has authority to commit the employer in matters that have significant financial impact;
- whether the employee has authority to waive or deviate from established policies and procedures without prior approval;
- whether the employee has authority to negotiate and bind the company on significant matters;
- whether the employee provides consultation or expert advice to management;
- whether the employee is involved in planning long- or short-term business objectives;
- whether the employee investigates and resolves matters of significance on behalf of management; and
- whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances.