Exempt v. Non-Exempt Employees

Employees in California are entitled to overtime pay, rest breaks, and certain leaves of absence when they are salaried employees that are classified as non-exempt employees. On the other hand, employees who are not entitled to overtime pay and other wage and hour protections are called exempt employees. Generally, employees that are paid by the hour are always non-exempt.

Exempt Employees:

Non-Exempt Employees:

  • Entitled to overtime for 8+ hours in a day and 40+ in a week
  • Rest breaks and meal periods must be provided by the employer
  • The employer tracks employee’s hours

Who is an Exempt Employee in California?

In California, the employee’s job title or position does not determine if the employee is exempt or not. Instead, the employee’s status as exempt or non-exempt is based on the employee’s actual job duties and salary. In California exempt employees are:

  • Employees in white-collar jobs such as administrative, professional, or executive
  • Employees that make at least two times the monthly minimum wage in California (about $35,000 per year)
  • Employees that are primarily engaged in an exempt job duty (more than 50%) such as intellectual, managerial or creative, and requires exercise of discretion and independent judgment

Categories that employees are exempt under in California:

  1. The Executive Exemption
  • Exempt executive duties are management of the business or enterprise
  • Directing the work of 2+ employees (authority or recommendation to hire/fire)
  • Regularly exercising discretion and independent judgment
  1. The Administrative Exemption (catch all)
  • Exempt administrative duties are doing office work / non-manual work
  • Regularly exercising discretion and independent judgment
  • Assisting the owner / manager / executive
  • Under general supervision:
    • Doing specialized or technical work that requires special training, experience, or knowledge
    • Doing special assignments or tasks
  1. The Professional Exemption
  • Need to be licensed or certified by the State of California
    • For example: lawyers, doctors, dentists, engineers, teachers, accountants, etc.)
  • Primary work is associated with license or certificate
  • Regularly exercising discretion and independent judgment
  1. The Computer Professionals Exemption
  • The employee’s work is intellectual or creative and requires the exercise of discretion and independent judgment
    • The application of systems analysis techniques and procedures
    • The design, development, creation, and testing of computer systems or programs and work related to the design of software or hardware
    • The manufacture, repair, or maintenance of computer hardware and related equipment
  • The employee must makes at least $84,130.53 a year ($7,010.88 monthly) to qualify for the exemption
  1. The Salespersons Exemption
  • Outside salespersons are exempt if the employee salesperson spends more than 50% of the time away from the employer’s place of business
  1. The Commission Exemption
  • Employees that make one and a half times the minimum wage in California (about $26,000 per year) are exempt from overtime if more than 50% of that employee’s pay is from commissions.