Overtime for Nonexempt Salaried Employees
Many employers assume that salaried employees are automatically exempt and not entitled to overtime or other statutory benefits. Employers assume that a yearly salary (which usually exceeds minimum wage) is sufficient compensation for overtime. This is not an intelligent assumption. According to the Court of Appeal, Labor Code section 510, “Absent an explicit, mutual wage agreement, a fixed salary does not serve to compensate an employee for the number of hours worked [pursuant to] statutory overtime requirements.” (Hernandez v. Mendoza (1988) 199 Cal.App.3d 721.) This proves that a weekly salary usually compensates the employee only for the standard forty-hour workweek rather than all hours worked in a week.
According to this Court of Appeal’s decision, even if you are an employer who does not require salaried employees to clock in and out, the court will rule in favor of the employee despite evidence of the actual hours worked. The Supreme Court held the employer responsible for failure to keep the record. “In such a situation, imprecise evidence by the employee can provide a sufficient basis for damages.” (Id. at 727.)
Without record of clocking in or out, the employer lacks evidence to prove that an employee did not actually work overtime hours.