What Is An Exempt Employee In California

Posted on Thursday February 06, 2025

One of the most frequent questions on employment law we are asked in San Diego, CA, relates to the inquiry, “What is an exempt employee in California?” An exempt employee, in simple terms, is a person not entitled to receive overtime pay or some other protection under labor laws in California. This category falls into what job duties are performed and includes whether or not the employee satisfies specific salary demands.

At Mara Law Firm, PC, we help San Diego employees and employers understand these classifications and avoid potential pitfalls.

Provisions of Wage Orders Relating to Exempt Employees

The wage orders in California define the standards that distinguish between exempt and non-exempt employees. In general, these wage orders are supposed to regulate wages, hours, and working conditions and provide exemptions only to those employees who meet specific standards.

Under the Industrial Welfare Commission’s (IWC) wage orders, exempt employees must:

• Primarily perform work that falls under one of the recognized exemption categories (e.g., executive or professional).
• Be paid a salary that is at least double the minimum wage for full-time work, a figure that changes as the minimum wage increases.
• Exercise discretion and independent judgment in their job roles.

These rules are designed to ensure that only employees with significant responsibilities or specialized skills qualify as exempt. Failure to adhere to these guidelines can result in disputes or legal consequences, which is why staying informed is crucial. 

Contact us now for a free and confidential consultation

message us 619-234-2833

The Five Types of Exemption Recognized in California Wage Orders

Under California law, there are five key exemptions that may apply to employees, depending on the nature of their job. These have been developed to be clear-cut for employers and employees alike.

The Executive Exemption

In order for an employee to be executive-exempt, the employee must manage a business, department, or recognized division and supervise the work of at least two other employees. They must also have significant input in hiring, firing, or other employment decisions. Their primary duties must consist of work related to business management or their department.

The Administrative Exemption

To meet the “directly related to management or general business operations” requirement, an employee’s work must support the management or servicing of the business rather than the production or sales effort. Examples include jobs in accounting, marketing, human resources, regulatory compliance, auditing, or database administration.

The Professional Exemption

The professional exemption covers work that is original and creative in character in a field of science or learning, including lawyers, doctors, engineers, architects, teachers, writers, artists, and musicians. Their work must be original in character and be of a kind that depends predominantly on the invention, imagination, or talent of the employee. It requires invention, imagination, or talent in a recognized field of artistic or creative endeavor.

The Inside Salesperson Exemption

Inside salespersons qualify for exemption if they earn more than 1.5 times the state minimum wage and spend more than 50% of their time actively engaging in sales activities. This exemption often applies to those in retail or other sales-heavy industries.

The Outside Salesperson Exemption

Outside sales employees must spend more than half their working hours conducting business away from their employer’s physical location. This exemption is unique because it does not have a minimum salary requirement. These workers may work alone and represent the company directly to clients by taking orders, obtaining orders, or closing deals in the field.

The Impact of Misclassifying Exempt Employees

Serious consequences may result from misclassifying employees as exempt when they do not meet the criteria of such classification. This can also lead to liability for unpaid wages, overtime, and penalties, in addition to exposure to expensive lawsuits.

In the case of employees, misclassification translates into lost wages and benefits. For instance, if a non-exempt employee works for over eight hours a day or 40 hours a week, he is entitled to overtime pay. In cases of misclassification, they may not even know that they have lost that money.

California’s labor laws are clearly written as to what the employer’s responsibilities are, yet have been misconstrued. Making the proper classification is not only legal but also a trusting and morale-boosting atmosphere in the workplace.

Contact Us for Expert Guidance on Exempt Employees

California’s exempt employee classifications can be tricky to navigate. At Mara Law Firm, PC, we are specialists in employment law, assisting San Diego employees and employers in resolving issues related to classification. Visit us at 2650 Camino Del Rio North, Suite #302, San Diego, CA 92108, or call 619-234-2833 for assistance.

David Mara

David Mara, founder of Mara Law Firm, PC, is a California employment attorney specializing in wage and hour law and representing injured civilians under U.S. defense contracts. He has recovered tens of millions for workers and contributed to landmark cases like Brinker Restaurant Corp. v. Superior Court. A member of multiple legal organizations, he also shapes California labor laws through legislative reviews. Mara holds a B.A. from San Diego State University and a J.D. from California Western School of Law and is admitted to practice in various federal courts.

At Mara Law Firm, we are dedicated to fiercely advocating for workers who have faced wage theft, violations of California labor laws, or injuries sustained under a U.S. Defense Contract. With decades of experience, our attorneys provide personalized, confidential, and no-cost consultations to ensure the best outcomes for our clients. We bring unmatched expertise to protect your interests and fight relentlessly to secure the compensation you deserve, guiding you through every step of the legal process to uphold your rights and deliver the relief you need.

Contact us now for a free and confidential consultation

message us 619-234-2833