Exempt vs non exempt employees in California

California labor laws, like many states’, draw a distinction between different types of employees based on the way they work. Exempt and nonexempt employees in California differ in the terms of their work duties and pay structure. These differences determine whether or not an employee is subject to various state and federal labor laws that include rules for overtime pay, breaks for meals and paid time off.

 

Post a Job

How can you tell whether a job is exempt or nonexempt?

Whether or not a job is exempt depends on several factors—mainly income, job title and work duties. The state sets specific limits in the law for what constitutes exempt versus nonexempt California jobs.

 

Salary limits

California sets a minimum salary for jobs to be classified as exempt. Jobs in California that pay less than $58,240 a year are generally classed as nonexempt. This figure, which is valid as of January 1, 2021, is double the state minimum wage of $14 an hour, multiplied by 52 40-hour workweeks. For companies with 25 or fewer employees, the limit is set at $54,080 a year for nonexempt workers.

 

This rule, like the other criteria for evaluating exempt versus nonexempt California jobs, is not absolute. Instead, it’s meant to be a guideline for employers and California state labor commissioners evaluating where a particular job falls on the scales. The final determination of exemption is usually the result of an evaluation of all the factors affecting the worker’s position.

 

Job titles

Some job titles are more likely than others to earn exempt status under California law. In general, job titles that denote management and senior supervisory positions are more likely than lower-rated jobs to be considered exempt. While there’s no exhaustive list of exempt job titles, common positions that fit under the so-called white collar exemption include executive, administrative, managerial and various professional job titles.

 

Executive titles

Executives are those who hold some of the most senior positions at most companies. Many small and medium-sized companies have at least a few top-level workers who’d be considered exempt, while large corporations sometimes have hundreds of such employees. Executive jobs are nearly always exempt positions for state law in California. Common executive titles include:

  • CEO
  • CFO
  • COO
  • Vice President of [department]
  • Director
  • Board Member
  • Regional/National/International Director or Manager

Administrative titles

Administrative roles vary a lot, depending on the company and the details of the specific job. Nevertheless, many admin jobs are exempt under California labor law. Common exempt administrative job titles include:

  • Executive Secretary
  • Personal Assistant
  • Senior Assistant
  • Administrative Assistant/Director/Manager

Professional titles

Professional employees are nearly always exempt. Though exceptions can be found here and there, almost all professional jobs are treated as similar to executive and senior management roles for the purposes of labor relations. Examples of professional job titles include:

  • Lawyer
  • Doctor
  • Consultant
  • IT Manager, Database Manager, Webmaster
  • Senior Accountant

Though professional jobs are usually exempt, it’s not always a safe bet to trust the job title alone for a determination of eligibility. Always check with a labor law professional to be sure whether a specific role at your company is likely to be exempt or not.

 

Terms of work

Some jobs are almost automatically classified as exempt. In this category are several categories of independent workers, notably:

  • Freelance workers
  • Independent contractors
  • Outside sales professionals
  • Some IT and tech jobs

Jobs that fall into these categories are generally likely to be considered exempt, though there are always exceptions. It’s a good idea to check with a labor law professional instead of depending on a title or work description alone.

 

What rights do exempt and nonexempt employees have in California?

Exempt and nonexempt positions come with different rights and responsibilities in California. Not only does this affect the kind of work that’s being done, but it can go a long way toward deciding the classification of the job in question.

 

In edge cases, such as jobs with vague descriptions or a lack of clear employment terms, California labor commissioners will often look at the benefits and other less-tangible elements of a position to decide what its final classification should be.

 

No single factor is likely to sway the final decision about classification. Instead, the labor commissioner usually considers all the relevant factors and weighs the balance of wages, benefits and paid time off to make a final determination. That’s why it matters how much employees are paid, how often they get paychecks and the structure for paying them. Other common factors include the specific job duties an employee is expected to perform and the level of supervision their work requires.

 

Hourly wage versus salary

Pay rate is one of the leading indicators of whether or not someone is an exempt employee in California. Hourly employees are almost all classed as nonexempt employees, while many salaried employees are exempt. This is not always the case, however. Some exempt employees are paid by the hour, and not all salaried employees are automatically exempt.

 

In some cases, an employee whose position would ordinarily be considered exempt could wind up being treated as a nonexempt employee based on how their compensation is structured. This is not strictly connected to the amount of pay an employee earns but to whether or not the pay is based on the hours worked.

 

If, for instance, a supervisory employee is paid a flat weekly wage of $2,000, the presumption might be that this is an exempt position. If, however, the employee takes off half a day every other week, and in those weeks their pay is reduced by 10% to make up for the lost time, the position might be classed as nonexempt because of the presumption that the pay reduction is connected to the hours worked, rather than the total work product.

 

White collar versus other work

Jobs in the United States are often divided into blue-collar and white-collar categories. Though these terms don’t have a set definition, blue-collar jobs tend to be more hands-on than white-collar jobs, which are more likely to be done in an office or at home.

 

The term blue-collar covers different types of jobs, from manual labor to equipment operations and transportation jobs. Many entry-level employees describe their jobs as blue-collar, as do many office workers whose work is either partly physical or relatively low in a company’s hierarchy. Because of this diversity, it can be difficult to generalize about blue-collar jobs, but any job that can be described this way is likely to be nonexempt in California.

 

White-collar work is even less firmly defined than blue-collar is. White-collar workers can be corporate CEOs, professionals like lawyers and university professors, upper and middle management or even receptionist and customer service specialists. It’s generally true that exempt workers tend to fall into the white-collar work category, but employers have to be careful using this distinction as a guide to exempt versus nonexempt California work. Many employees who’d be considered white-collar workers are not exempt, which makes this distinction no more than a rough guide to classification at best.

 

Independence versus supervision

The degree of supervision an employee has during working hours also influences the determination of a job’s exempt status under California law. Though again this one factor is not determinative on its own, labor commissioners in California can gauge how closely supervised an employee is as part of an overall determination of labor status.

 

Employees who perform nonexempt work are more closely supervised than exempt workers. Thus, a line worker at a manufacturing plant, who probably gets direct supervision from a foreman and less direct oversight from supervisors and management, is very likely to be considered nonexempt, while the supervisors and plan management are likely to be exempt for legal purposes. This is not always the case, however, such as for entry-level truck drivers or employees who work in remote locations under minimal direct supervision. These employees may still be classed as nonexempt despite performing their duties far from the nearest supervisor. Likewise, a middle management employee who reports to a senior manager in the next office can still be considered exempt, despite being supervised very closely.

 

As always with potentially thorny legal issues, be sure to consult with competent legal counsel before making assumptions about how a particular employee’s duties and wage structure affect their classification. Though the final determination of an employee’s status is up to the state, qualified experts in employment law can guide management in making generally sound classification decisions.

 

How are jobs in California usually classed?

Labor commissioners in California don’t necessarily have a detailed checklist of criteria for deciding which jobs are or should be exempt. Even though there are guidelines in place, which are a complex fusion of state and federal labor laws, each commissioner or administrative law judge is free within limits to make a case-by-case determination. As an employer, you may not always be fully up to speed on every detail of exempt versus nonexempt California employees. Nevertheless, every employer should have at least a ballpark idea of which jobs are likely to fall into which category.

 

Fortunately, business owners don’t have to be experts in employment law in order to function in California. As a loose rule of thumb, many occupations tend to fall into either the exempt or nonexempt category. Knowing the general boundaries can help you navigate this part of employment law relatively safely.

 

Jobs that are usually exempt

Some types of jobs are usually considered exempt. While exceptions can always be found, certain broad categories of employment are typically granted the presumption that they’re exempt.

 

Senior management jobs, which usually come with executive titles and employment contracts that specify pay and work terms, are frequently classed as exempt. If the employee in question is an executive, a member of a company’s board of directors, an equity stakeholder or another very senior official, it’s very likely they’re exempt under any common analysis of labor standards. An exception may exist for senior employees at small companies, where workers with executive or other prestigious job titles may still work under terms that would be considered nonexempt if they did the same job for a larger company.

 

Contractors are another group of workers who are nearly always treated as exempt for breaks and overtime pay. In addition to not being formal members of the company they work with, contract employees are frequently paid according to their work output, rather than their input of hours. Chartered accountants, corporate lawyers, some IT staff and various marketing jobs are often classed as exempt for these reasons. California labor commissioners often recognize exceptions to these standards, however. A contractor who doesn’t have a formal contractors’ license, or who does not have a professional certification, could be construed to be nonexempt. This is especially likely to occur if the contract employee is paid by the hour, works under close supervision and doesn’t have clients outside of a single company.

 

Jobs that are usually not exempt

In many ways, it’s easier to spot a nonexempt position than its exempt counterpart. Typically, entry-level employees are assumed to be nonexempt until evidence is offered to the contrary. If a job is low in seniority or authority, pays by the hour, has close supervision and is treated as an at-will position, then in all likelihood it’s nonexempt for labor law.

 

The list of nonexempt occupations in California is too long to go over in detail, but when in doubt, it’s probably safer to assume a position falls into this category than to take a chance on miscategorizing an employee as exempt.

 

Examples of typical nonexempt jobs include entry-level food service, transportation, customer service and custodial work. In general, people who are hired to do laundry, clean surfaces or dishes, carry heavy objects or stock shelves are almost always nonexempt.

 

Certain medical jobs, sometimes including entry-level nursing and paramedic jobs, are also nonexempt for most purposes, though the policy for breaks can often be relaxed for emergency workers and health care employees, depending on the nature of the work they do.

 

Jobs that can go either way

Some jobs are, by their very nature, close to the border between exempt and nonexempt. These jobs may occupy middle management positions, such as a line supervisor for a small restaurant or shift leader at a franchise operation, or they could be semi-independent jobs, such as sales professionals who work entirely on commission and bonuses.

 

Assistants also straddle the line between exempt and nonexempt work. While a typical administrative professional or receptionist is very likely to be classed as a nonexempt employee, some executive assistants and personal assistants can be treated as exempt for most purposes. Legal secretaries, assistants, law clerks and other paraprofessional job positions vary somewhat and may be subject to their own rules at the state level.

 

Realtors and real estate agents may also be edge cases between categories. In this case, the distinguishing line may come down to how the agents are paid, whether they’re required to put in a given minimum number of hours and how much latitude they have for things such as dress code, use of personal vehicles and customer contact policies.

 

Hairdressers, barbers and beauticians are also in a gray area for labor law exemptions. While many beauty professionals in California are fully nonexempt employees of salons and aestheticians’ shops, others are technically freelance workers who rent space from their salon to work independently. A decent guideline here is to look at how the worker is paid. If the beautician or hairdresser gets an hourly wage from the company that owns the shop, it’s probably safe to assume they’re nonexempt employees. If they pay a franchise fee or rent, or if they can come and go on their own schedule and use their personal supplies, then you may have an exempt contractor.

 

Because so many edge cases exist, there’s no definitive list of jobs that fall into either category, and some jobs have special considerations all on their own. If you’re ever in any doubt about the potential status of a position at your company, check with a lawyer who’s experienced in California labor standards and follow their written advice as closely as you can.

 

What happens if a position is misclassified?

Employers in California are strongly motivated to properly categorize their employees. Because there’s potentially a financial incentive to class nonexempt workers as exempt, the state’s presumption may be to find misconduct and impose fines on employers that make what could have been an honest mistake. It’s important to prepare for potential consequences of miscategorization.

 

In addition to the statutory penalties imposed by the state, employers who incorrectly classify employees may be sued for unpaid overtime and back wages. Many employees who win cases like this can also get awards for unpaid vacation time and other violations.

 

FAQ

 

Do exempt employees have to take a lunch break in California?

Some, but not all, exempt workers are entitled to meal and rest breaks. Executives, for instance, do not automatically get paid breaks, though sales reps and truck drivers do. Consult with a labor attorney for details about each position’s meal and rest break policies.

 

Can you require exempt employees to use PTO for partial day absences?

California employers aren’t permitted to deduct absences or partial time off from exempt employees’ regular wages, though they may require the use of sick leave or vacation time. If the exempt employee doesn’t have enough time off to cover an absence, they must be paid their regular salary or lose exempt status.

 

What is the minimum salary to be exempt in California?

Exempt California employees must earn at least $58,240 a year, or double the state minimum wage, in order to be eligible for exempt status. At companies with 25 or fewer employees, the limit is $54,080 a year.

Post a Job

Ready to get started?

Post a Job

*Indeed provides this information as a courtesy to users of this site. Please note that we are not your recruiting or legal advisor, we are not responsible for the content of your job descriptions, and none of the information provided herein guarantees performance.