Misclassification of Non-Exempt Employees Can Be a Costly Mistake

Misclassifying a California employee as exempt can lead to significant legal and financial consequences for employers. Under California law, exempt employees must meet strict salary and duty requirements, and failure to properly classify workers can result in liability for unpaid overtime, missed meal and rest breaks, and other wage violations. If an employer mistakenly classifies a non-exempt employee as exempt, they may owe back wages, penalties, interest, and attorneys’ fees, which can add up quickly, especially in class action lawsuits.

Beyond financial risks, misclassification can also lead to audits and enforcement actions by the California Labor Commissioner or the Division of Labor Standards Enforcement (DLSE). Employees who are denied proper wages may file wage claims or lawsuits, creating reputational damage and operational disruptions for the employer. Given California’s strict labor laws and the burden placed on employers to prove proper classification, businesses should carefully assess job duties and compensation structures to ensure compliance and minimize risk.

We are always available to help employers properly classify employees.