EXEMPTION FOR ADMINISTRATIVE EMPLOYEES

The employee’s must exercise discretion and independent judgment with respect to matters of significance.

The executive must spend more than 50% of his or her time carrying out duties that require discretion and independent judgment.

Discretion and Independent Judgment means that the employee must be able to compare and evaluate possible courses of conduct and then make a decision or make a recommendation after those various possibilities have been considered. The term “matters of significance” refers to the level of importance or consequence of the work performed.

The exercise of discretion and independent judgment does not include clerical or secretarial work, recording data, or performing other mechanical, repetitive, recurrent or routine work. If the duties and responsibilities of the employee are based on his or her application of well-established techniques, standards or procedures, the employee is not exercising discretion and independent judgment.

Courts look at the following factors in deciding whether the employee exercises discretion and independent judgment with respect to matters of significance:

• whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices;
• whether the employee carries out major assignments in conducting the operations of the business;
• whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business;
• whether the employee has authority to commit the employer in matters that have significant financial impact;
• whether the employee has authority to waive or deviate from established policies and procedures without prior approval;
• whether the employee has authority to negotiate and bind the company on significant matters;
• whether the employee provides consultation or expert advice to management;
• whether the employee is involved in planning long- or short-term business objectives;
• whether the employee investigates and resolves matters of significance on behalf of management; and
• whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances.

The employee must do one of the following:

(1) regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity

(2) performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or

(3) executes under only general supervision special assignments and tasks.

The employee must be paid a salary and the monthly salary must be at least two (2) times the state minimum wage for full-time employment. Full-time employment is defined in California Labor Code section 515(c) as 40 hours per week. The current minimum monthly salary is $4,160 for employers with 26 or more employees and $3,813.33 for employers with 25 or fewer employees.