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What Is the Difference Between Exempt and Nonexempt Employees in California?

Nonexempt employees must receive minimum wage, overtime pay, meal breaks, and rest breaks. Exempt employees are excluded from these protections if they meet both a salary test (earning at least twice the minimum wage for full-time work, $68,640 annually in 2025) and a duties test (performing executive, administrative, or professional work). Your job title doesn’t determine exemption status. Your actual duties and how you’re paid determine whether you’re exempt or nonexempt.

Why Exemption Status Matters

Your exemption status determines whether you receive overtime pay for long hours. Nonexempt employees receive time-and-a-half for hours over 8 per day or 40 per week, plus double time in some situations. Exempt employees receive the same salary regardless of hours worked. Many employers misclassify workers as exempt to avoid paying overtime. Understanding the strict requirements for exemption helps you identify misclassification and claim the overtime wages you deserve.

Key Differences: Exempt vs. Nonexempt

Understanding the fundamental differences helps you recognize your status and rights.

Factor Nonexempt Employees Exempt Employees
Overtime Pay Required (1.5x for OT, 2x for DT) Not required
Minimum Wage Must be paid at least minimum wage Not applicable (salary must meet threshold)
Meal Breaks Required (30 min for 5+ hour shifts) Not required
Rest Breaks Required (10 min per 4 hours) Not required
Salary Requirement None (can be hourly or salaried) Must earn 2x minimum wage for full-time
Duties Requirement Any type of work Must perform exempt duties
Time Tracking Employer must track all hours Often no detailed time tracking
Both Tests Required N/A Must pass BOTH salary AND duties tests

The key distinction: nonexempt employees get paid for every hour worked with premium rates for overtime. Exempt employees receive a fixed salary regardless of hours.

The Salary Test: How Much You Must Earn

To be exempt in California, you must earn a minimum salary. This threshold is higher than federal law and increases with minimum wage changes.

California Salary Threshold (2025)

You must earn at least two times the state minimum wage for full-time employment (40 hours per week).

Calculation for 2025:

  • State minimum wage: $16.50/hour
  • Full-time equivalent: 40 hours/week × 52 weeks = 2,080 hours/year
  • Minimum annual salary: $16.50 × 2,080 × 2 = $68,640/year
  • Minimum monthly salary: $5,720/month
  • Minimum weekly salary: $1,320/week

If you earn less than $68,640 per year (or the monthly/weekly equivalent), you cannot be classified as exempt, regardless of your job duties.

Local Minimum Wage Impact

If you work in a city with a higher minimum wage than the state, the salary threshold increases accordingly. For example:

San Francisco (minimum wage $19.18/hour effective July 1, 2025):

  • Minimum exempt salary: $19.18 × 2,080 × 2 = $79,788.80/year

Los Angeles (minimum wage $17.87/hour effective July 1, 2025):

  • Minimum exempt salary: $17.87 × 2,080 × 2 = $74,340.80/year

Your employer must pay the salary threshold based on the applicable local minimum wage if it’s higher than the state rate.

Salary Basis Requirement

“Salary” means you receive a predetermined amount each pay period that isn’t reduced based on quality or quantity of work. Your employer cannot dock your pay for partial-day absences or poor performance.

If your employer reduces your salary for taking a few hours off or for performance issues, you’re not paid on a true salary basis and cannot be exempt.

Exceptions to Salary Requirement

Computer professionals can be exempt if paid at least $56.97 per hour (2025 rate) instead of on salary, if they meet the computer professional duties test.

Licensed physicians and surgeons are exempt from the salary requirement if they meet the professional duties test.

Teachers employed by educational institutions are exempt from the salary requirement.

The Duties Test: What Work You Must Perform

Meeting the salary threshold isn’t enough. You must also perform exempt duties that fall into specific categories. California recognizes these main exemptions:

Executive Exemption

To qualify as an exempt executive, you must meet all of these requirements:

1. Primary duty is management: More than 50% of your time involves managing the business or a recognized department or subdivision.

2. Regularly direct the work of two or more employees: You supervise at least two full-time employees (or the equivalent in part-time employees).

3. Authority to hire/fire or significant input: You have authority to hire and fire, or your recommendations about hiring, firing, advancement, promotion, or other employment status changes are given particular weight.

4. Customarily and regularly exercise discretion and independent judgment: You make important decisions about significant matters without detailed instructions.

Examples of true executives:

  • Store manager who supervises staff, handles hiring/firing, controls inventory, and manages operations
  • Department head who oversees multiple employees, sets department priorities, and makes staffing decisions
  • General manager with authority over business operations and personnel decisions

Not executive exemption (common misclassifications):

  • “Assistant manager” who mostly performs same tasks as regular employees
  • “Team lead” with no real authority to hire, fire, or discipline
  • “Supervisor” who simply relays management’s instructions without independent authority
  • “Manager” who spends most time doing non-managerial work

Administrative Exemption

To qualify as an exempt administrative employee, you must meet all of these requirements:

1. Primary duty is office or non-manual work: Work is performed in an office setting rather than production or sales.

2. Directly related to management or general business operations: Your work relates to running the business itself (HR, finance, IT, legal, compliance, marketing) rather than producing the product or service the business sells.

3. Exercise discretion and independent judgment on significant matters: You make important decisions about substantial issues without detailed supervision. You have authority to make commitments or take action that significantly affects business operations.

Examples of true administrative exemption:

  • HR manager who develops policies, handles employee relations, and makes staffing recommendations
  • Financial analyst who prepares reports, analyzes business performance, and advises management
  • Executive assistant to senior executive with authority to commit the executive to courses of action

Not administrative exemption (common misclassifications):

  • Office worker who follows standardized procedures without independent judgment
  • Data entry clerk who inputs information according to set rules
  • Administrative assistant who schedules appointments and answers phones
  • Customer service representative who handles inquiries using scripts

Professional Exemption

California recognizes two types of professional exemptions: learned professionals and creative professionals.

Learned Professional requirements:

  1. Primary duty requires advanced knowledge in a field of science or learning
  2. Advanced knowledge customarily acquired through prolonged specialized intellectual instruction
  3. Work requires consistent exercise of discretion and judgment

Examples: Doctors, lawyers, engineers, architects, accountants, registered nurses, scientists, professors

Creative Professional requirements:

  1. Primary duty requires invention, imagination, originality, or talent
  2. Work in a recognized field of artistic or creative endeavor

Examples: Actors, musicians, composers, writers, artists, graphic designers doing original creative work

Not professional exemption:

  • Paralegals or legal assistants (not licensed attorneys)
  • Bookkeepers (not CPAs)
  • LVNs or medical assistants (not RNs)
  • Technicians without professional degrees

Computer Professional Exemption

Computer professionals can be exempt if they meet specific requirements:

Duties requirements (must primarily perform):

  • Application of systems analysis techniques and procedures
  • Design, development, documentation, analysis, creation, testing, or modification of computer systems or programs
  • Design, documentation, testing, creation, or modification of computer programs related to machine operating systems

AND one of these compensation requirements:

  • Paid at least $56.97/hour (2025 rate), OR
  • Paid a salary of at least $118,657.43/year (2025)

Examples of exempt computer professionals:

  • Software engineers designing and developing applications
  • Systems analysts evaluating and improving computer systems
  • Programmers writing and testing complex code

Not computer professional exemption:

  • Help desk technicians providing user support
  • Computer repair technicians fixing hardware
  • Data entry workers using computers for non-programming tasks
  • Workers using computers as tools but not developing software

Outside Sales Exemption

Outside sales employees are exempt if:

  1. Primary duty is making sales or obtaining orders/contracts
  2. Customarily and regularly engaged away from the employer’s place of business

There is no salary requirement for outside sales employees. They must work primarily outside the office making sales.

Examples: Sales representatives who travel to client locations, pharmaceutical sales reps visiting doctors

Not outside sales exemption:

  • Inside sales reps who work from office or call center
  • Retail sales associates working in stores

Common Misclassification Examples

Employers frequently misclassify these positions as exempt when they’re actually nonexempt:

“Assistant Manager” in Retail or Food Service

Many retail stores and restaurants give employees the title “Assistant Manager” and pay them a salary to avoid overtime. But if the assistant manager spends most time doing the same work as hourly employees (ringing up sales, stocking shelves, preparing food), they don’t meet the executive duties test.

Red flags:

  • Spends majority of time performing tasks identical to hourly workers
  • Limited or no authority to hire, fire, or discipline
  • Cannot set schedules or make significant operational decisions
  • Simply acts as “manager on duty” when real manager is absent

Office Administrator or Coordinator

Employees with these titles often perform clerical work following standardized procedures. They may schedule appointments, maintain files, process paperwork, and coordinate logistics. This is non-exempt clerical work, not exempt administrative work requiring independent judgment on significant matters.

Red flags:

  • Follows detailed procedures or protocols without discretion
  • Work involves routine data processing or record-keeping
  • Decisions are limited to applying established rules
  • No authority to commit company to courses of action

“Project Manager” or “Account Manager”

These titles sound exempt but often aren’t. If you don’t supervise employees or make significant independent decisions about business operations, you’re likely nonexempt.

Red flags:

  • Coordinates others’ work but doesn’t supervise or manage them
  • Follows project plans created by others
  • Limited authority to make decisions without approval
  • Spends time on technical work rather than management

Salaried Field Technicians

Service technicians, installation specialists, and field workers are sometimes misclassified as exempt even though they perform hands-on technical work, not executive, administrative, or professional duties.

Red flags:

  • Primary work is installing, repairing, or servicing equipment
  • Follows technical procedures and checklists
  • Limited discretion beyond choosing sequence of tasks
  • Doesn’t supervise others or make business decisions

What to Do If You’re Misclassified as Exempt

If you believe you’re misclassified as exempt when you should be nonexempt, take these steps:

Step 1: Evaluate Your Classification

Ask yourself:

  • Do I meet the salary threshold ($66,560+ annually)?
  • Do I spend more than 50% of my time on exempt duties?
  • Do I have real authority and independent judgment on significant matters?
  • Do I supervise employees or make important business decisions?

If the answer to any of these is “no,” you’re likely misclassified.

Step 2: Document Your Actual Duties

Create a detailed list of your actual job duties:

  • What you do each day
  • Percentage of time spent on each task
  • Whether you supervise others and have hiring/firing authority
  • Examples of decisions you make with or without approval
  • Comparison of your work to non-exempt employees’ work

This evidence proves your actual duties don’t meet the exemption requirements.

Step 3: Track Your Hours

Even though your employer treats you as exempt, start tracking your hours:

  • Daily start and end times
  • Time spent working after hours (emails, calls, weekend work)
  • Total hours per day and per week

This documentation proves the overtime you’re owed.

Step 4: Calculate Unpaid Overtime

Determine your regular hourly rate:

  • Annual salary ÷ 2,080 hours = regular hourly rate

Calculate overtime owed:

  • Count hours over 8 per day and over 40 per week
  • Multiply by 1.5 × regular rate
  • Total this for the full period of misclassification (up to 3 years)

Step 5: Report the Misclassification

You have several options:

Talk to your employer: Some employers fix misclassifications when you point them out, especially if the error was unintentional.

File a wage claim with DLSE: California’s Labor Commissioner investigates exemption claims and can order your employer to pay unpaid overtime.

Consult an employment attorney: Attorneys handle misclassification cases on contingency and can file lawsuits to recover unpaid overtime plus penalties.

Step 6: Consider Class Action Potential

If your employer misclassified you, they likely misclassified others with the same job title. Ask coworkers with your same title about their duties and hours. Class action lawsuits for misclassification can recover substantial amounts for entire groups of workers.

Step 7: Know You’re Protected

Your employer cannot fire you, demote you, or retaliate against you for:

  • Questioning your exempt classification
  • Requesting overtime pay
  • Filing a wage claim
  • Participating in an investigation

If they retaliate, you have additional legal claims.

Real-World Misclassification Examples

Example 1: Retail Assistant Manager

Jessica works as “Assistant Manager” at a clothing retail store, earning $52,000 annually.

Her actual duties:

  • 70% of time: ringing up sales, folding clothes, helping customers (same as hourly employees)
  • 20% of time: acting as “manager on duty” when store manager absent (opens/closes store, handles basic issues)
  • 10% of time: providing input on schedules (manager makes final decisions)
  • No authority to hire, fire, or discipline employees
  • Cannot set prices or make purchasing decisions

Analysis:

  • Salary test: FAILS ($52,000 < $68,640 threshold for 2025)
  • Duties test: FAILS (primarily performs non-exempt retail work, lacks real management authority)

Result: Jessica is nonexempt and entitled to overtime.

Unpaid overtime over 2 years:

  • Regular rate: $52,000 ÷ 2,080 = $25/hour
  • Average 45 hours/week: 5 hours OT × $37.50 = $187.50/week
  • 104 weeks × $187.50 = $19,500 owed

Example 2: Office Coordinator

Marcus works as “Office Coordinator” at a mid-size company, earning $68,000 annually.

His actual duties:

  • Schedules meetings and appointments
  • Maintains filing systems and databases
  • Processes expense reports according to policy
  • Coordinates travel arrangements
  • Orders office supplies
  • Answers phones and greets visitors
  • Follows detailed procedures for all tasks

Analysis:

  • Salary test: FAILS ($68,000 < $68,640 threshold for 2025)
  • Duties test: FAILS (performs routine clerical work, no discretion on significant matters, doesn’t directly relate to management/general business operations in the way administrative exemption requires)

Result: Marcus is nonexempt and entitled to overtime. He fails both the salary test (the 2025 threshold is $68,640) and the duties test.

Unpaid overtime over 18 months:

  • Regular rate: $68,000 ÷ 2,080 = $32.69/hour
  • Average 48 hours/week: 8 hours OT × $49.04 = $392.32/week
  • 78 weeks × $392.32 = $30,601 owed

Example 3: IT Support Specialist

Keisha works as “Senior IT Support Specialist,” earning $85,000 annually.

Her actual duties:

  • Responds to help desk tickets
  • Troubleshoots hardware and software problems
  • Installs and configures computers
  • Performs system updates and maintenance
  • Follows established procedures for all issues
  • Escalates complex problems to IT management
  • Does not design, develop, or program systems

Analysis:

  • Salary test: PASSES ($85,000 > $66,560 threshold)
  • Duties test: FAILS (provides technical support, not computer professional duties of systems analysis, software development, or programming)

Result: Keisha is nonexempt and entitled to overtime.

Unpaid overtime over 3 years:

  • Regular rate: $85,000 ÷ 2,080 = $40.87/hour
  • Average 50 hours/week: 10 hours OT × $61.31 = $613.10/week
  • 156 weeks × $613.10 = $95,644 owed

Frequently Asked Questions

Can my employer make me exempt just by calling me a manager?

No. Your job title doesn’t determine exempt status. You must meet both the salary test and duties test based on your actual job responsibilities, not your title. Many “managers” are nonexempt because they don’t perform true managerial duties.

If I’m salaried, does that automatically make me exempt?

No. Being paid a salary is one requirement for exemption, but you must also meet the duties test. Many salaried employees are nonexempt and entitled to overtime. The salary basis is necessary but not sufficient for exemption.

Can I waive my right to overtime by agreeing to be classified as exempt?

No. You cannot waive your right to overtime if you don’t meet the legal requirements for exemption. Your classification is determined by law, not by agreement. Even if you signed a contract agreeing to exempt status, you’re entitled to overtime if you don’t actually qualify as exempt.

What if I meet the duties test but not the salary test?

You’re nonexempt. Both tests must be met. If you earn less than the salary threshold, you cannot be exempt regardless of your duties. You’re entitled to overtime pay.

Can my employer switch me from nonexempt to exempt or vice versa?

Your employer can change your classification prospectively if you move to a new position with different duties or receive a salary change that affects your status. However, they cannot retroactively change your classification. If you were misclassified in the past, you’re still owed overtime for that period.

Related Topics

Challenge Your Exempt Misclassification and Recover Overtime

If you’re classified as exempt but don’t truly meet both the salary and duties requirements, you’re entitled to years of unpaid overtime. California’s exemption rules are strict and narrowly applied. Most employees are nonexempt.

Don’t let your job title or salary fool you. Evaluate your actual duties and salary against the legal tests. If you’re misclassified, you could be owed tens of thousands of dollars in overtime pay. Document your hours, calculate what you’re owed, and take action to recover your unpaid wages.

Legal Disclaimer: This information is for educational purposes only and does not constitute legal advice. Employment law is complex and fact-specific. If you have questions about your specific situation, consult with a qualified California employment attorney who can evaluate your case and provide personalized guidance.

Source: California Department of Industrial Relations (DIR), Division of Labor Standards Enforcement (DLSE), California Labor Code § 515, Industrial Welfare Commission (IWC) Wage Orders, California Code of Regulations Title 8