On October 8, 2006, Harry Hu, an investigator with the Department of Labor (DOL), gave a talk on wage and hour laws in San Francisco, CA.
Whether an employee is considered exempt depends on three tests: salary level, salary basis, job duties. If an employee is classified as exempt, the employer may not make deductions for absences unless they are full day absences. For instance, an employee who goes to the doctor for 1 or 2 hours must be paid for the entire day. However, an employer may dismiss an employee for poor performance if the absences make it difficult for the employer to run its business.
If a person is ready, willing, and able to work, deductions may not be taken for time not worked when there is no work available.
In determining whether someone is exempt, the employer should focus on the duties, not the title of the position. If the duties change, someone classified as exempt, may still get paid for overtime, because they are misclassified. For instance, a manager who works late to do the tasks of a secretary on vacation for two weeks, should be paid for any overtime during the two weeks. Just because someone is paid a salary does not mean the person does not need to be paid for any overtime.
An employer should be careful when classifying employees as independent contractors when it has the ability to control the hours and tools used by the worker.
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