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Posts Tagged ‘Exemptions’

Things happen. No matter how hard a person tries, sometimes events in a person’s life turns everything on end and creates havoc. Often, this results in serious financial challenges which leads people to seek bankruptcy relief to help them recover from such problems. If you happen to live in California, then there are some California bankruptcy laws that apply specifically to that state.

In California, bankruptcy laws are basically derived from the US Federal bankruptcy statues and codes, or Title 11 of the United States Code. However, the state has allowed for some differences in the exemptions that are allowed when filing for brokeness. In general, the exemptions refer to income and assets that a debtor has which will not be affected by it, or in other words, which are exempt from the brokeness proceedings.

The laws in California allow for the use of the federally sanctioned supplemental exemptions, in conjunction with the allowed California State exemptions. This state is comprised of four areas for US bankruptcy court California districts and each of these courts is named for that district. The four districts are: the California Central bankruptcy court, the California Eastern bankruptcy court, the California Northern bankruptcy court, and the California Southern bankruptcy court.

There are two different sets of exemptions that are allowed under the California bankruptcy laws. These two classifications of exemptions are known as System One and System Two and the debtor has the ability to choose which system of exemptions they will file their bankruptcy claim form under.

Under California law, the System One option provides for a homestead exemption of up to ,000 for a single person who is not disabled, up to ,000 for families, and up to 5,000 for those who are senior citizens. System One also allows for the following personal property exemptions: cash in the bank up to ,000; building materials of up to ,000; jewelry and heirlooms up to a value of ,000; motor vehicles up to a value of ,900; burial plots; appliances; home furnishings; personal clothing; health related aids; food; and any money that comes from personal injury or wrongful death claims.

Additionally, System One also makes allowances for the following exemptions: insurance claims of any type; pensions; benefits such as unemployment compensation; workers’ compensation claims; health aid claims; tools of the trade which includes such items as tools, uniforms, equipment, books and manuals needed to continue in a trade; and wages exempt at a minimum of 75%.

System Two exemptions of the brokeness laws in California differs a great deal from the System One exemptions. The homestead exemption in System Two allows for a maximum of ,425 for all homestead categories. The jewelry and heirloom exemption is capped at ,150.

The motor vehicle exemption is up to ,775 and the trade tools exemption is limited to ,750. System Two also limits the total amount of personal benefits that can be exempted to ,425 and also allows for a wild card exemption of up to a value of 5. Under System Two there is no wage exemption and only ERISA-qualified pension benefits are exempt.

Because these two exemption systems under the California bankruptcy laws tend to be complex, it is strongly recommended that people hire an attorney who specializes in this area of the law for help with bankruptcy. Generally, the attorney will review your complete financial situation and make a recommendation about which of the two exemption systems would be best to use when it is time to file bankrupt in this state.

One of the most common and often expensive mistakes an employer can make is to misclassify their employees as being exempt from overtime, if they are, in fact, non exempt employees by law. Exempt employees are often referred to as salaried employees and in very basic terms it means that the employee is therefore is not eligible for overtime. California labor law addresses what criteria are necessary in order to classify employees properly. This law relates specifically to the California administrative exemption, the California professional exemption, the California executive exemption, and the California outside sales exemption. “California” is stressed because the federal labor laws are slightly different than those of the state of California. As an employer or employee it is wise to educate yourself on your state’s employment laws or the consequences could be costly.

It’s also important to note that in California, whenever a labor law dispute is brought to court, the burden of proof is on the employer. This means it is the employer’s responsibility to prove that they are not guilty of the violations they are accused of committing. Lastly, and most importantly, for the most part, the actual job duties that an employee performs determine whether or not they are exempt, not the job title given to them.

The California administrative exemption statute states that in order for an employee to be classified as exempt the employee must perform office work or non manual work that is directly related to policy shaping or business operations. This means that the employee must have the power to issue and enforce company policy. It does not necessarily apply to workers that are allowed to exercise discretion in their daily job function, within the parameters or guidelines of existing company policy. This can be confusing, but a very generic example of California administrative exemption may be helpful. A non exempt employee does not have the authority to create new rules that other company employees must follow, but an exempt employee would have this authority.

The California professional exemption most commonly refers to professional occupations that require a California state license, such as dentistry, engineering, optometry, law, medicine, architecture, teaching, or accounting. However, nurses and pharmacists are rarely included as exempt under the California professional exemption law. The most common mistake among employers is to misclassify employees that have not yet received their licensing from the state.

The most frequently used defense by employers is that their employee can be classified exempt under the California executive exemption. Although, it is actually the hardest exemption to qualify for because it requires that the employee perform ALL of a long list of criteria named in the labor law, not just some. To be more specific, the California executive exemption requires that the exempt employee have the ability to hire or fire other employees or at least have a highly valued opinion in this matter. It also requires that the employee directly manages the work of two or more employees or the equivalent of 80 hours a week. This exempt employee must be in charge of the entire department or unit they are managing and regularly exercise discretion and independent judgment on the job. This employee must also be paid a salary of twice the California minimum wage.

The California outside sales exemption differs slightly from federal law in that California does not regard “exempt work” duties incidental to the employee’s sales or solicitations, including incidental deliveries and collections. This difference in law is significant for route salespeople and others who perform many other functions in an average day, such as delivery, repair, and maintenance. California outside sales exemption applies to an adult worker that spends over half his or her time away from the employer’s place of business selling or taking orders for an actual product or service. The final area that is different about the California outside sales exemption from the other California exemption laws is that is does not require that the salary be “twice the minimum wage amount”. Often times these jobs have opportunity for commissions or bonuses.

With such specific regulations to comply with, it is extremely important that as an employer or as an employee you are well aware of how to classify yourself or others. Under California law, the employee has up to four years to file a lawsuit to claim any wages that were not paid as a result of being misclassified as exempt from overtime. Additionally, if the court finds that the employer knowingly and intentionally misclassified the employee, the financial ramifications can be exceedingly detrimental. As an employee if you suspect you have been misclassified, you may want to contact the California Labor Board or a California labor law attorney to help you claim the money that is owed to you.

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