A California employee is presumed to be entitled to overtime pay for more than eight hours of work a day or more than 40 hours of work a week unless an employer can show the employee meets all the criteria of the executive, istrative, or professional exemption or other narrow exemption. To fall under one of these “white-collar” exemptions, an employee must, for example, spend more than half his time engaged in exempt duties, generally those requiring him to exercise independent judgment.
Where an employer wrongly classifies an employee as exempt and consequently doesn’t keep records of his time, the employee will recover overtime pay based on his estimated number of overtime hours sufficient for a judge to make a “just and reasonable inference” of the hours he worked, unless the employer can show precisely how much overtime the employee worked or can show why the employee’s estimate is wrong or unreliable.
An employer is only responsible for paying for time a misclassified employee voluntarily worked through authorized meal breaks to which nonexempt employees are entitled if the employee can show the employer knew or reasonably should have known the employee worked through those breaks.
The California Court of Appeal applied these principles in a recent ruling involving a claim for unpaid wages brought by Terry Furry, the former sales and marketing director of the East Bay Express, an Oakland weekly newspaper.
The trial judge found that the Express failed to show Furry was an exempt employee, which would have excused the paper from tracking the hours Furry worked. The judge nonetheless rejected Furry’s claim for overtime pay because the judge found Furry’s testimony fuzzy, requiring the judge to engage in “pure guess work” even to approximate the number of overtime hours Furry worked.
The appellate court reversed, concluding that, because the Express failed to keep required timekeeping records for Furry, Furry was entitled to at least some overtime pay based on his estimate from memory of the hours he worked beyond his regular schedule doing such things as creating specific artwork and promotional materials and attending specific events.
The court of appeal found it most important that Furry’s supervisor had testified she knew Furry had occasionally worked evenings and weekends and knew that the promotional events Furry was required to attend occurred outside his normal business hours. “Once an employee shows that he performed work for which he was not paid, the fact of damage is certain; the only uncertainty is the amount of damages.”
The court of appeal further held the Express was liable for up to $4,000 in statutory penalties for its “knowing and intentional” failure to provide Furry with accurate wage statements showing, among other things, the total hours he worked, information an employer need not provide exempt employees. It did not matter that the Express had classified Furry as an exempt employee in good faith. It only mattered that the wage statements were deficient and that the omission of the required information was not a clerical or inadvertent mistake.
The absence of timekeeping records, however, did not mean Furry had to be paid for the hours he spent working through meal breaks, much less one additional hour of pay to which nonexempt employees are entitled for breaks the employer prohibits or discourages them from taking. Furry acknowledged he alone decided whether or not to take breaks and that no one at the Express ever told him not to take breaks. The court of appeal concluded that testimony from Furry, his subordinate, and a former co-editor of the Express that Furry typically skipped meal breaks once a week to focus on getting the paper out was insufficient to meet Furry’s burden of showing the Express knew or reasonably should have known of the missed breaks.
The ruling reminds employers to use care in classifying employees as exempt in light of the potential consequences of getting it wrong.
Dan Eaton is a partner with the San Diego law firm of Seltzer Caplan McMahon Vitek where his practice focuses on defending and advising employers. He also is an instructor at the San Diego State University Fowler College of Business where he teaches classes in business ethics and employment law. He may be reached at [email protected]. His Twitter handle is @DanEatonlaw.
