Exempt employees are employees to whom important California wage and hour laws, such as overtime laws, do not apply. Non-exempt employees, however, are protected by California wage and hour laws. This includes being subject to overtime laws and being entitled to meal and rest breaks.
The largest class of exempt employees is executive, administrative and professional employees who earn at least twice the California minimum wage (the “white-collar exemption”).1
You are only an exempt employee if you 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 are an exempt employee, or
- paying you a salary rather than an hourly wage.
Below, our California employment and labor lawyers answer the following frequently asked questions about the difference between exempt and non-exempt employees in California:
- 1. Who is an exempt employee under California employment law?
- 2. Which California wage and hour laws do not apply to exempt employees?
- 3. What can I do if my employer mis-classifies me as a California exempt employee?
If you have further questions after reading this article, we invite you to contact us at Shouse Law Group.
1. Who is an exempt employee under California employment law?
The California Labor Code lists the categories of employees who have exempt status under wage and hour law–that is, to whom overtime pay and other wage/hour laws do not apply.
1.1. Executive, administrative and professional employees (white-collar exemption)
The largest and most important category of California 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:
- Have primary duties that are executive, administrative or professional (this generally means that 50% or more of his/her work time must be devoted to such tasks);
- Regularly and customarily exercise discretion and independent judgment at work; and
- Earn a salary equivalent to at least twice the state minimum wage for full-time (40 hours/week) work.3
As of January 2021, the minimum salary requirement for an employee to be exempt under the white-collar exemption is $54,080 (if the employer employs less than 26 workers).
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 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.4
There is an exception to the normal professional wage-hour exemption for registered nurses.
Registered nurses are non-exempt employees–which means overtime rules apply to them–unless they are primarily engaged in executive or administrative tasks and meet the other requirements of the white-collar 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.)
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:
- The employee is primarily engaged in intellectual or creative work that requires the exercise of discretion and independent judgment;
- The employee is highly skilled and proficient in the application of highly specialized information to computer systems analysis, programming or software engineering; and
- The employee earns at least $47.48 per hour, or $98,907.70 per year paid on a monthly basis (these figures are as of 2021 and will increase with inflation).7
The software professional wage/hour exemption in California does NOT apply to:
- Trainees or entry-level employees still learning to apply highly specialized information in the computer field;
- Employees who have not attained the skill and expertise to work without close supervision;
- 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 $86.49 per hour or the full-time salary equivalent (as of 2021; this figure adjusts with inflation).10
Private school teachers
Another class of What can I do if my employer misclassifies me as a California exempt employee 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–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 offered to 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 is not required 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 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 $21 per hour (if the company has 26 or more employees) or $19.50 per hour (if the company has 25 or fewer employees).
Example: Tessa is a recent college graduate. She takes a job in ad sales for an internet magazine. She is paid a salary equivalent of the state 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 is paid 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 California 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 as a California exempt employee?
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 s/he is 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.
We specialize in helping California employees who have been misclassified as exempt bring wage/hour lawsuits against their employers to collect overtime compensation that was wrongfully denied to them. 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…
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, do not hesitate to contact us at Shouse Law Group.
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.
- Labor Code 515 LC — Exemptions [from wage/hour laws]. (“(a) The Industrial Welfare Commission may establish exemptions from the requirement that an overtime rate of compensation be paid pursuant to Sections 510 and 511 for executive, administrative, and professional employees, if the employee is primarily engaged in the duties that meet the test of the exemption, customarily and regularly exercises discretion and independent judgment in performing those duties, and earns a monthly salary equivalent to no less than two times the state minimum wage for full-time employment. The commission shall conduct a review of the duties that meet the test of the exemption. The commission may, based upon this review, convene a public hearing to adopt or modify regulations at that hearing pertaining to duties that meet the test of the exemption without convening wage boards. Any hearing conducted pursuant to this subdivision shall be concluded not later than July 1, 2000.”). Also see the federal law and federal regulations, Fair Labor Standards Act (FLSA).
- Same. Courts use a “duties test” to determine whether an employee is exempt.
- See 8 California Code of Regulations (“C.C.R.”) 11040(1)(A). (“1. Applicability of Order This order shall apply to all persons employed in professional, technical, clerical, mechanical, and similar occupations whether paid on a time, piece rate, commission, or other basis, except that: (A) Provisions of sections 3 through 12 shall not apply to persons employed in administrative, executive, or professional capacities.”)
- Based on the facts of Nordquist v. McGraw-Hill Broadcasting Co. (1995) 32 Cal.App.4th 555.
- Labor Code 515 LC — Exemptions [from wage/hour laws]. (“(f)(1) In addition to the requirements of subdivision (a), a registered nurse employed to engage in the practice of nursing shall not be exempted from coverage under the orders of the Industrial Welfare Commission, unless he or she individually meets the criteria for exemptions established for executive or administrative employees. (2) This subdivision does not apply to any of the following: (A) A certified nurse midwife who is primarily engaged in performing duties for which certification is required pursuant to Article 2.5 (commencing with Section 2746) of Chapter 6 of Division 2 of the Business and Professions Code. (B) A certified nurse anesthetist who is primarily engaged in performing duties for which certification is required pursuant to Article 7 (commencing with Section 2825) of Chapter 6 of Division 2 of the Business and Professions Code. (C) A certified nurse practitioner who is primarily engaged in performing duties for which certification is required pursuant to Article 8 (commencing with Section 2834) of Chapter 6 of Division 2 of the Business and Professions Code. (D) Nothing in this paragraph shall exempt the occupations set forth in subparagraphs (A), (B), and (C) from meeting the requirements of subdivision (a).”)
- Labor Code 515.5 LC — Computer software professionals; exemption from wage/hour laws. (“(a) Except as provided in subdivision (b), an employee in the computer software field shall be exempt from the requirement that an overtime rate of compensation be paid pursuant to Section 510 if all of the following apply: (1) The employee is primarily engaged in work that is intellectual or creative and that requires the exercise of discretion and independent judgment. (2) The employee is primarily engaged in duties that consist of one or more of the following: (A) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications. (B) The design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications. (C) The documentation, testing, creation, or modification of computer programs related to the design of software or hardware for computer operating systems. (3) The employee is highly skilled and is proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, or software engineering. A job title shall not be determinative of the applicability of this exemption. (4) The employee’s hourly rate of pay is not less than thirty-six dollars ($36.00) or, if the employee is paid on a salaried basis, the employee earns an annual salary of not less than seventy-five thousand dollars ($75,000) for full-time employment, which is paid at least once a month and in a monthly amount of not less than six thousand two hundred fifty dollars ($6,250). The department shall adjust both the hourly pay rate and the salary level described in this paragraph on October 1 of each year to be effective on January 1 of the following year by an amount equal to the percentage increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers. (b) The exemption provided in subdivision (a) does not apply to an employee if any of the following apply: (1) The employee is a trainee or employee in an entry-level position who is learning to become proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering. (2) The employee is in a computer-related occupation but has not attained the level of skill and expertise necessary to work independently and without close supervision. (3) The employee is engaged in the operation of computers or in the manufacture, repair, or maintenance of computer hardware and related equipment. (4) The employee is an engineer, drafter, machinist, or other professional whose work is highly dependent upon or facilitated by the use of computers and computer software programs and who is skilled in computer-aided design software, including CAD/CAM, but who is not engaged in computer systems analysis, programming, or any other similarly skilled computer-related occupation. (5) The employee is a writer engaged in writing material, including box labels, product descriptions, documentation, promotional material, setup and installation instructions, and other similar written information, either for print or for onscreen media or who writes or provides content material intended to be read by customers, subscribers, or visitors to computer-related media such as the World Wide Web or CD-ROMs. (6) The employee is engaged in any of the activities set forth in subdivision (a) for the purpose of creating imagery for effects used in the motion picture, television, or theatrical industry.”)
- Labor Code 515.6 LC –Licensed physicians and surgeons; exemption from § 510 [overtime laws]. (“(a) Section 510 shall not apply to any employee who is a licensed physician or surgeon, who is primarily engaged in duties that require licensure pursuant to Chapter 5 (commencing with Section 2000) of Division 2 of the Business and Professions Code, and whose hourly rate of pay is equal to or greater than fifty-five dollars ($55.00). The department shall adjust this threshold rate of pay each October 1, to be effective the following January 1, by an amount equal to the percentage increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers. (b) The exemption provided in subdivision (a) shall not apply to an employee employed in a medical internship or resident program or to a physician employee covered by a valid collective bargaining agreement pursuant to Section 514.”)
- State of California, Department of Industrial Relations, Memorandum re Overtime Exemption for Licensed Physicians and Surgeons.
- Labor Code 515.8 LC — Teachers at private elementary or secondary academic institutions; Section 510 not applicable; exemptions [from wage and hour laws]. (“(a) Section 510 does not apply to an individual employed as a teacher at a private elementary or secondary academic institution in which pupils are enrolled in kindergarten or any of grades 1 to 12, inclusive. (b) For purposes of this section, “employed as a teacher” means that the employee meets all of the following requirements: (1) The employee is primarily engaged in the duty of imparting knowledge to pupils by teaching, instructing, or lecturing. (2) The employee customarily and regularly exercises discretion and independent judgment in performing the duties of a teacher. (3) On and after July 1, 2017, the employee earns the greater of the following: (A) No less than 100 percent of the lowest salary offered by any school district to a person who is in a position that requires the person to have a valid California teaching credential and is not employed in that position pursuant to an emergency permit, intern permit, or waiver. (B) The equivalent of no less than 70 percent of the lowest schedule salary offered by the school district or county in which the private elementary or secondary academic institution is located to a person who is in a position that requires the person to have a valid California teaching credential and is not employed in that position pursuant to an emergency permit, intern permit, or waiver. (4) The employee has attained at least one of the following levels of professional advancement: (A) A baccalaureate or higher degree from an accredited institution of higher education. (B) Current compliance with the requirements established by the California Commission on Teacher Credentialing, or the equivalent certification authority in another state, for obtaining a preliminary or alternative teaching credential. (c) This section does not apply to any tutor, teaching assistant, instructional aide, student teacher, day care provider, vocational instructor, or other similar employee. (d) The exemption established in subdivision (a) is in addition to, and does not limit or supersede, any exemption from overtime established by a Wage Order of the Industrial Welfare Commission for persons employed in a professional capacity, and does not affect any exemption from overtime established by that commission pursuant to subdivision (a) of Section 515 for persons employed in an executive or administrative capacity.”)
- 8 C.C.R. 11040(1)(B). (“(1)(B) Except as provided in Sections 1, 2, 4, 10, and 20, the provisions of this order [wage order addressing overtime and meal/rest breaks] shall not apply to any employees directly employed by the State or any political subdivision thereof, including any city, county, or special district.”); Kim v. Regents of Univ. of Calif. (2000) 80 Cal.App.4th 162, 166. (“Regardless of whether Kim was directly employed by the state within the meaning of the above regulation, the Regents are nonetheless exempt from its mandate by virtue of their constitutional status. Paralleling the Regents’ broad powers to organize and govern the university is the general immunity from legislative regulation [including wage/hour laws] enjoyed by the University and its Regents.”).
- See Department of Labor Exempt Outside Sales Employees.
- 8 C.C.R. 11040(3)(D). (“(D) The provisions of subsections (A), (B) and (C) above shall not apply to any employee whose earnings exceed one and one-half (1 1/2) times the minimum wage if more than half of that employee’s compensation represents commissions.”)
- Labor Code 515 LC — Exemptions [from wage/hour laws], endnote 1 above; 8 C.C.R. 11040(1)(A), endnote 3 above.
- 8 C.C.R. 11040(1)(A), endnote 3 above.