Salaried workers doing nonexempt tasks raises problems

Since layoffs and furloughs introduced labor shortages, some salaried employees who are exempt from state wage and hour laws have been performing nonexempt work to fill in the gaps. That has required employers to navigate strict regulations on how to classify their workforce and pay them accordingly.

But as state officials gradually allow nonessential businesses to reopen, attorneys say opposition to these wage and hour laws by small businesses might be on the horizon.

Businesses where managerial staff are spending more than 50% of their work hours performing nonexempt work might try to seek declaratory relief or emergency legislation so they can continue classifying these staff members as exempt employees, said Christine K. Noma, who represents employers as a partner at Wendel Rosen LLP. Under state law, exempt employees are not eligible for overtime pay but must be paid at least twice the minimum hourly wage based on a 40-hour work week.

Nonexempt employees are also entitled to meal and rest breaks as well as pay stubs. "If somebody is now spending more time doing nonexempt type work, such that they're improperly classified ... then that raises a number of Labor Code claims," explained John Mullan, who represents workers at Rudy Exelrod Zieff & Lowe LLP. Misclassified employees could file complaints with the state labor commissioner or directly in court, Mullan said.

Employees could bring Private Attorney General Act claims, Noma said. "The penalties are very significant."

Throughout the pandemic, employers in the restaurant industry have frequently dealt with this issue as managerial staff and executive chefs took on work ordinarily performed by their supervisors to make up for labor shortages while pivoting to pickup and delivery services, said John H. Feldmann III, of counsel at Cozen O'Connor. But when nonessential businesses open, they will likely face the same classification problem, Noma said. "When businesses start reopening most of them are going to be reopening with a reduction in staff," she explained.

"The California wage and hour laws are incredibly complex and very difficult to satisfy in the most normal of circumstances, and now you have these very challenging circumstances, and the state has been largely absent in providing guidance to companies to comply with some of these wage and hour requirements," said Robert R. Roginson, a management-side attorney at Ogletree, Deakins, Nash, Smoak & Stewart PC.

For now, complaints from employees about being misclassified are not widespread, said Mullan, adding he thought introducing new regulations on the issue wouldn't be helpful. "I don't think it's a viable solution to weaken the current laws as to who is an exempt employee, as to who is a nonexempt employee," he said.

Roginson disagreed. "The government should look to suspend the PAGA statutes during this time so that employers aren't left guessing what needs to be done to make sure they're complying with the law," he said.