Who is considered an exempt employee in California?

What is “exempt” depends both on federal and state law.

The employee has to meet both federal and state exemptions to be exempt. In federal law, exempt employees are typically those employees who earn more than $684 per week and exercise sufficient discretion in at least half of their job tasks. This means someone like a Director of Engineering is almost definitely exempt (high pay, significant decision-making responsibility), but a front-line support person may not be (no discretion, low pay).  

At the state level, laws vary from state to state.

In California, specifically, two tests that must be met. First, a salary level test. The employee must make at least 2x minimum wage for full-time employment. The minimum wage is increasing year by year in CA, but for 2021, this means $1,040 per week or $54,080 annually for employers with fewer than 26 employees (or $58,240.00 if 26 or more employees).

Once the salary level test is met, there is a duties test. This is similar to federal law but more specific. There are a few specific exemptions:

  • Administrative. Performs office/nonmanual work related to management policies or general business operations, or functions. Assists executives or performs under only general supervision.
  • Executive. Essentially must be management or manage a department. Must direct the work of 2+ other employees. Must have weighted input in personnel decisions. 
  • Professional. Licensed in a profession (law, medicine, etc) or recognized learned artistic profession (apprenticeship, routine training) or create work original and creative in character in a recognized field of artistic endeavor or advanced science.

For any of these to apply, the employee must regularly exercise discretion and independent judgment. There is also an exemption for highly paid software engineers. They must make at least $46.55 per hour; or, if salary, at least $96,968.33 per year in monthly payments of at least $8,080.71. They also have to have discretion and independent judgment in their work and work on software design, development, analysis, testing, etc. This does not include entry-level employees learning on the job.

There are also other specific exemptions and requirements that may apply depending on the specific circumstances.

It’s important to get these classifications right, or the employer could be faced with a lawsuit or state or federal penalties for unpaid overtime, missed rest and meal periods and other penalties.

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