Earlier this month the California Court of Appeals reviewed a situation where an employee who had been making significantly more money than the average worker, was still subject to California overtime law. In Negri v. Koning & Associates, Mark Negri was an insurance claims adjuster for Koning & Associates. He was paid $29 per hour but was given no minimum guarantee of pay per month. Although he worked more than 40 hours per week, every week, he was never paid more than $29 per hour. As a result Negri sued his employer for violating California overtime law. The employer argued that Negri was a salaried employee, subject to exemption from overtime.

Under California law employees are not subject to overtime pay when:

1. they meet one of the duties tests for exemption,
2. they customarily and regularly exercise discretion and independent judgment in performing their duties,
3. they earn a monthly salary that amounts to twice the minimum wage.

In reviewing these elements the court determined that Negri seemed to satisfy all of the above prongs of the test, except for the salary aspect. Although he earned much more than twice the minimum wage, there was a question as to whether his pay could be classified as a salary. The court found that the definition of salary is quite specific, it does not merely mean pay. Rather, it is “a fixed rate of pay as distinguished from an hourly wage” that is not subject to reduction because of the quantity of hours worked or the quality of work. The employer had admitted that Negri was paid based on the number of hours he worked, and that alone dictated his pay. Because of this the court held that Negri had not been paid a salary and was thus entitled to overtime pay.

This is a very helpful case for employees because Negri would have been entitled to exemption if he merely would have had an established pay rate. There are many reasons why an employee would want to require employees to be paid hourly. The biggest reason is that it ensures that they are only paid for time the employee is productive. However, if an employer does not guarantee a set amount of pay per month or year the work will be considered hourly and subject to overtime law.

Keep in mind that different categories of employees have different overtime requirements. To view a full list of the categories of employees exempt from overtime law visit the California Department of Industrial Relations website.

If your employer has not paid you the full amount you have earned you may be entitled to a class action lawsuit or settlement against them. Contact the experienced California wage and hour attorneys at the Law Offices of Michael S. Cunningham, LLP. Call (951) 213-4786 today for a free consultation.