California Overtime Exemptions – Exempt vs. Non-Exempt Employees

Under California law, exempt employees

• generally have a white-collar job,
• get paid as a salary rather than an hourly wage, and
• are not entitled to overtime pay.

The five primary categories of exempt employees are:

1. Executive employees
2. Administrative employees
3. Licensed professionals
4. Computer employees
5. Outside sales employees

For 2023 in California, exempt employees must earn at least $1,240 a week ($64,480 yearly).

Unlike exempt employees, non-exempt employees are protected by wage and hour laws. This means they are entitled to

• overtime pay as well as
• meal breaks and rest breaks.

You are only an exempt employee if your job duties meet the legal definition under the California Labor Code. Your employer can NOT make you an exempt employee simply by

• having you sign a contract stating that you agree to be an exempt employee, or
• paying you on a salary basis rather than hourly rates.

Below, our California employment and labor law attorneys answer the following frequently asked questions about the difference between exempt and non-exempt employees in California:

• 1. What’s the difference between exempt vs non-exempt employees?
  • 1.1. Executive, administrative and professional employees (white-collar exemption)
  • 1.2. Other exempt professionals
  • 1.3. Exemption for employees earning commissions
• 2. Which wage and hour laws do not apply to exempt employees?
• 3. What can I do if my employer misclassifies me?

If you have further questions after reading this article, we invite you to contact us at Shouse Law Group.

1. What’s the difference between exempt vs non-exempt employees?

The California Labor Code lists the categories of employees who have exempt status under wage and hour law – that is, to whom overtime wages and other wage/hour laws do not apply.¹

1.1. Executive, administrative and professional employees (white-collar exemption)

The largest and most important category of exempt employees is

• executive,
• administrative and
• professional employees.

This administrative exemption to overtime rules is sometimes known as the “white-collar exemption.”²

In order to be exempt from wage/hour laws under this category, an employee must:

1. Have primary duties that are executive, administrative or professional (this generally means that 50% or more of their work time must be devoted to such tasks, such as general business operations);
2. Regularly and customarily exercise discretion and independent judgment at work; and
3. Earn a salary equivalent to at least twice the state minimum wage for full-time employment (40 hours/week) work.³

As of January 2023, the minimum salary requirement for an employee to be exempt under the white-collar exemption is $64,480.

It is a common misconception that anyone who is paid a salary or works in an office is an exempt employee under this category. But in fact that is not true.

Example: Brian is a sports anchorperson for a TV network.

His job title mostly consists of gathering and summarizing sports news stories from other sources. He does not have a degree in a related field, and he is not allowed to provide independent commentary on the stories he reports.

Brian is NOT an exempt employee under the executive, administrative and professional exemption because his job does not involve discretion or independent judgment. In short, it is not exempt work.⁴

Registered nurses

There is an exception to the normal professional wage-hour employee exemption for registered nurses.

Registered nurses are non-exempt employees (which means overtime hours rules apply to them) unless they are primarily engaged in executive or administrative tasks and meet the other requirements of the white-collar/executive exemption.⁵

1.2. Other exempt professionals

In addition to the regular wage and hour law exemption for white-collar employees discussed above, California law clarifies that certain other professionals are also exempt from overtime rules.

(Most employees covered under these specific exemptions would probably be exempt under the general exemption as well.)

Computer professionals

The California Labor Code also exempts certain computer software professionals from overtime and wage/hour laws.⁶

This exemption applies to employees who work primarily in computer systems analysis, software or hardware design or computer system or program design or development, and of whom all of the following are true:

1. The employee is primarily engaged in intellectual or creative work that requires the exercise of discretion and independent judgment;
2. The employee is highly skilled and proficient in the application of highly specialized information to computer systems analysis, programming or software engineering; and
3. The employee earns at least $53.80 per hour, or $112,065.20 per year paid on a monthly basis (these figures are as of 2023 and will increase with inflation).⁷

The software professional wage/hour exemption in California does NOT apply to:

• Employees who have not attained the skill and expertise to work without close supervision;
• Trainees or entry-level employees still learning to apply highly specialized information in the computer field;
• Employees who engage in the operation of computers or the manufacture, repair or maintenance of computer hardware;
• Employees who are engineers or drafters who are highly skilled in computer-aided design but not in computer systems analysis, programming, etc.;
• Writers who provide content connected with computers and software; or
• Employees who engage in highly-skilled computer systems analysis or programming for the purpose of creating effects imagery for the movie, TV or theater industry.⁸

Doctors and surgeons

Another class of professionals exempt from overtime laws in California is licensed physicians and surgeons engaged primarily in job duties that require licensure. This exemption does not apply to

• residents,
• interns or
• doctors covered under collective bargaining agreements.⁹

In order to meet the requirements of this wage/hour law exemption, doctors must earn at least $97.99 per hour or the full-time salary equivalent (as of 2023; this figure adjusts with inflation).¹⁰

Private school teachers

Another class of employees exempt from overtime laws in California is teachers at private K-12 schools.

In order to qualify for this wage/hour exemption, a teacher must

• be primarily engaged in the task of imparting knowledge to students,
• customarily and regularly exercise discretion and independent judgment, and
• have either a bachelor’s or higher degree from an accredited university or valid teaching credentials.¹¹

This overtime exemption for private school teachers only applies to teachers who earn the greater of the following amounts:

• 100% of the lowest salary offered by any school district in California to credentialed teachers; and
• 70% of the lowest salary offered to credentialed teachers by the school district in the city or county where the private school is located.¹²

Example: Dan is a kindergarten teacher at a small private school. He earns $39,000 per year (a $3,250 monthly salary)–not enough to qualify for the general white-collar exemption to overtime rules in California.

However, his job description qualifies him for the private school teacher exemption to wage and hour laws. The lowest salary level for public school teachers in the district where he works is $35,000, and he earns more than that.

Therefore, Dan is an exempt employee, and the school he works for does not have to pay him overtime.

Government and University of California employees

California overtime and meal/rest break laws do not apply to employees of state or local governments. All employees of the University of California are also exempt from California overtime rules based on the state constitution.¹³

Outside Salespeople

Outside salespeople may be exempt as well if they meet a two-pronged test.¹⁴

1.3. Exemption for employees earning commissions

Finally, there is an exemption to overtime rules for employees who

• earn more than one and one-half times the minimum wage, and
• earn more than half of their compensation from commissions.¹⁵

So to be exempt, employees earning commission must earn more than $23.25 per hour.

Example: Tessa is a recent college graduate. She takes a job in ad sales for an internet magazine. She gets a salary equivalent of the California minimum wage for full-time work and also receives a commission for each ad she sells.

The magazine requires people in Tessa’s position to sell at least 100 ads per year. Tessa is able to do this, but it requires her to put in around 55 hours of work per week. The commissions from 100 ad sales per year, plus Tessa’s salary, are equivalent to about two and a half times the state minimum wage for full-time work.

Tessa is an exempt employee under California overtime laws because, when she meets her quota for ad sales, she earns more than half her income from commissions and gets more than 1.5 times the state minimum wage.

Therefore, her employer does not need to compensate her for working over 40 hours per week most weeks.

2. Which wage and hour laws do not apply to exempt employees?

Exempt employees are exempt from California overtime laws.¹⁶

This means that, if you are an exempt employee, your employer does not need to pay you time and a half if you work:

• more than eight hours in a workday, or
• more than 40 hours in a workweek, or
• otherwise “work off the clock.”

In addition, California employers are not required to provide regular meal and rest breaks to exempt employees the way they are required to provide them to non-exempt employees.¹⁷

3. What can I do if my employer misclassifies me?

The California employment lawyers at Shouse Law Group have seen far too many instances of misclassification – where employers misclassify non-exempt employees as exempt to avoid paying overtime or meeting other California labor law requirements.

Often the employer counts on the employee not knowing the law and claims that the employee is exempt because they are paid a salary rather than an hourly wage or has a “desk job.”

In some cases, an employee may even be asked to sign an employment contract “agreeing” to be exempt from overtime requirements–and then asked to perform a large amount of “work off the clock.”

But under California wage and hour law none of these factors will make a non-exempt employee exempt.

Going to Human Resources or talking to your boss about your status may solve the problem. Otherwise, we specialize in helping California employees who have been misclassified as exempt bring wage/hour lawsuits against their employers to collect unpaid overtime compensation. If numerous employees are affected, a wage and hour class action lawsuit may be appropriate.

Mis-classified non-exempt employees may also be eligible for compensation for meal and rest breaks that were not granted to them.

Call us for help…

In conclusion, for questions about exempt vs. non-exempt employees in California or to discuss your case confidentially with one of our skilled California labor and employment attorneys. Therefore do not hesitate to contact us at Shouse Law Group.

In addition, we have local employment law offices in and around Los Angeles, San Diego, Orange County, Riverside, San Bernardino, Ventura, San Jose, Oakland, the San Francisco Bay area, and several nearby cities.

See our related articles, What does “full time exempt” mean? A labor lawyer explains and unpaid wage claims. And go to the California Industrial Welfare Commission (IWC) wage orders page.

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