Are You Exempt? Are You Sure?

Barbara Freet, president of Human Resource Advisors in Lafayette, Calif., and one of the speakers slated for next month's California CPA Education Foundation's business conferences, says approaches to alternative work arrangements in the state have changed drastically since the California Workplace Flexibility Act was passed in 2000.

The law created stricter rules for paying overtime, and requires employers to stipulate in advance how the work hours of non-exempt employees will be allocated over a week. In our world, uncertified accountants have non-exempt status and must be paid for overtime. A number of companies have been sued - successfully - because they failed to correctly classify groups of workers.

Freet told our James Rubin that uncertified accountants, including employees who fill bookkeeping roles, are non-exempt because they rely so much on Generally Accepted Accounting Procedures. In other words, they follow rules more than their own judgment. "People who are exempt have to spend over 50 percent of their time on issues requiring independent judgment," Freet explained. "Staff accountants aren't making these types of judgments."

She adds that classification depends on job function, not a company's determination. "Employers think they can decide if someone is exempt or non-exempt," Freet says. "They can't."