What Is a California Exempt Employee: What Recruiters Need to Know

Navigating California's employment laws can be very difficult, especially when it comes to comprehending the nuances of exempt employee classifications. Thus, employers must remain aware of these laws in order to maintain compliance.
This article discusses who is considered an exempt employee in California and the particular requirements set forth by state law, the main factors that determine whether an employee is considered exempt or non-exempt, including salary thresholds to job duties. The purpose of this article is to clarify and provide guidance on the topic.

How is a California Exempt Employee Defined?

An exempt employee in California is one who is not bound by certain wage and hour regulations, such as those pertaining to minimum wage and overtime compensation. Usually, an employee must pass both the duties test and the salary test in order to be exempt. A minimum monthly pay, which is now double the state minimum wage for full-time employment and amounts to about $115,763.3 annually, is required of the employee in order to pass the salary test. According to the duties test, the employee's work responsibilities must fit into one of several categories, including executive, administrative, or professional. 

The Meaning and Implications of California Exempt Employee Status

In California, an employee must regularly receive a fixed salary that is unaffected by workload or hours worked in order to be considered exempt. In 2024, the minimum salary threshold for exempt status under the Fair Labor Standards Act (FLSA) was $844 per week, and $43,888 annually, up from $684 per week. But California sets a higher bar.
As of January 1, 2025, people need to make at least:

• $1,280 per week in order to qualify for exemption (for businesses with 26 or more employees).

For computer software professionals, the exemption applies if they are paid:

• An hourly rate of $55.58 (for all hours worked)
• A monthly pay of  $9,646.96, or
• A yearly income of $115,763.3.

If these requirements are not met, the worker is usually classified as non-exempt, which entitles them to overtime, meal and rest breaks, and other labor protections.

How to Classify if Your Employees Are Classified as Exempt Employees in California

Employees in California who are exempt from wage and hour laws are known as exempt employees. On the other hand, these rules apply to non-exempt employees and give them rights like overtime pay, a minimum wage, and meal and rest breaks. California labor law determines a worker's eligibility for exemption, not the employer.

Frequently Asked Questions About California Exempt Employee Rights

What is the minimum salary requirement for exempt employees in California?
As of 2025, the minimum salary for exempt employees will be $68,640 annually.

Are exempt employees in California subject to the state’s minimum hourly wage?
No, exempt employees must receive a fixed salary that satisfies the state's minimum requirement for exempt status; they are not entitled to the hourly minimum wage.

Are exempt employees entitled to overtime pay in California?
No, under California exempt employee rules, regardless of how many extra hours they put in, exempt employees do not get paid for overtime.

What are the meal and rest break rules for exempt employees in California?
Employers are not obligated by California labor law to give exempt workers meals or breaks. Non-exempt workers are mainly subject to the state's break requirements. However, employers may still choose to offer similar break policies for exempt staff.
If an employer does offer meal breaks to exempt employees, the following conditions should be met:
The employee must be relieved of all work-related duties.

• The employer must not control how the employee spends their break time.
• The break must be uninterrupted and last at least 30 minutes.

It's important to note that offering breaks to exempt employees should not conflict with their exempt status under California labor law. Employers must ensure that break policies are consistent with internal practices and legal guidelines to avoid misclassification risks.
In California, exempt employees are entitled to several types of protected leave, including:

• Family and Medical Leave
• Sick Leave
• Jury Service Leave
• Voting Time Leave
• Domestic Violence or Sexual Assault Leave
• Emergency Response Leave
• Organ and Bone Marrow Donation Leave
• School Leave
• Military Leave
• Bereavement Leave

Although employers are not obligated to provide vacation or holiday pay to exempt employees, they are required to offer these forms of leave when specific conditions are met, regardless of the employee's exempt status.
What salary requirements must be met for exempt status in California?
Employees must be paid more than a certain minimum salary, more than non-exempt employees receiving hourly wages, in order to be considered exempt.

What are the rules for bereavement leave for exempt employees in California?
In California, unpaid bereavement leave must be offered by private employers with five or more employees upon request from an exempt employee. Employees are allowed to take up to five days off. Before the leave can be taken, the employee must have worked for the company for at least 30 days in order to be eligible. Employees of the State of California or local governments are also eligible for this leave.

What are the vacation leave rules for exempt employees in California?
Employers in California are not required by law to offer paid or unpaid vacation time to exempt employees. Vacation leave is granted at the employer's discretion; specifics are outlined in the employment contract or company policies.

What are the rules for family and sick leave for exempt employees in California?
Eligible exempt employees are permitted to take up to 12 workweeks of unpaid leave over 12 months under the federal Family and Medical Leave Act (FMLA) or the California Family Rights Act (CFRA). Depending on company policy, employers may decide to offer paid leave. Furthermore, employers must offer exempt employees at least 40 hours or five days of paid sick leave annually in accordance with the Paid Sick Leave (PSL) law.

What actions can employers take if an exempt employee is misclassified in California?
Employers in California must promptly change their classification of employees as non-exempt in order to comply with state labor laws if they do not meet the requirements. This entails examining the worker's compensation and job responsibilities to make sure they satisfy the exemption requirements. Additionally, employers should adjust timekeeping and compensation as needed. Employees have the right to complain to the California Division of Labor Standards and Enforcement (DLSE) if the problem is not resolved.

Paid Time Off (PTO) for Exempt Employees in California
Although paid time off (PTO) is not legally required for exempt employees in California, many employers do provide it as a benefit. Employer policies usually dictate the amount of paid time off, how it is accrued, and the requirements for eligibility. To guarantee clarity for exempt employees, employers should specify these details in employment contracts or employee handbooks.
Depending on particular circumstances and relevant labor laws, actual situations may differ.

Pay Deductions for a California Exempt Employee

Employers are permitted by California law to deduct specific amounts from the pay of exempt salaried employees, but only in certain situations. These deductions must not violate the requirement that exempt employees receive their full salary for any week in which they perform work.
Legally Required Deductions Are Among the Permitted Deductions:

• State and federal income taxes
• Medicare and Social Security
• Wage garnishments mandated by the court
• Deductions made voluntarily with written consent
• Premiums for health, dental, or vision insurance
• Contributions to retirement plans (such as 401(k)s)
• Additional benefits chosen by employees
• Deductions Under a Legitimate Collective Bargaining Agreement or Wage Agreement
• Benefit payments for welfare and health
• Contributions to pension funds

It should be noted that, although wage garnishments are legal, Labor Code Section 2929(a) prohibits an employer from firing an exempt worker because of a wage garnishment that results from a single judgment.

Benefits and Legal Protections Under California Exempt Employee Laws

In California, exempt employees are safeguarded by a comprehensive set of employment laws intended to promote equity, security, and openness in the workplace. Many important rights and benefits are still in place, even though some wage and hour regulations are different from those for a non-exempt employee California.
These consist of:

• Protection from Retaliation and Discrimination: Employers are not allowed to treat employees unfairly or retaliate against them because of protected traits. Additionally, California law protects whistleblowers from reprisals, guarantees pay equity, permits open discussion of wages, and guarantees pregnancy-related accommodations.
• Hiring Procedures and Background Checks: Within legal bounds, pre-employment drug tests and background checks are acceptable. However, in keeping with California's commitment to advancing pay equity, employers are not permitted to ask about an applicant's past salary.
• Workplace Standards: Exempt employees are protected by more general workplace regulations pertaining to minimum wage, breastfeeding accommodations, and child labour laws (where applicable), even though they are typically not covered by rules regarding overtime, meal periods, or rest breaks.
• Compensation and Deductions: Exempt employees are subject to California law, which regulates things like timely and accurate pay statements, allowable wage deductions (like voluntary retirement contributions), and adherence to wage notice requirements.
• Leave Benefits: Bereavement leave, family and medical leave (FMLA/CFRA), paid family leave, paid sick leave, domestic violence leave, and emergency responder leave are among the protected leaves that exempt employees are entitled to. Both federal and state laws require these.
• Protections for Health and Safety: Employers are required to keep a safe workplace, which includes a documented Injury and Illness Prevention Program. The use of handheld cell phones while driving for work is prohibited by law, and smoking is prohibited in the workplace.
• End of Employment Requirements: California employers must provide job references upon request, issue final pay in compliance with state deadlines, and adhere to notice requirements under the California WARN Act in the event of significant layoffs.

Conclusion for Employers

It is essential to have a thorough understanding of California's labor laws and regulations in order to manage exempt employees. Even though they are not eligible for meal breaks, rest periods, or overtime compensation, exempt workers nevertheless have access to a number of crucial benefits and protections, such as sick leave, family leave, and, in some cases, job security. As an employer, it’s essential to ensure that exempt employees meet the minimum salary requirements and are classified correctly to avoid legal issues.
To help streamline your recruitment and sourcing process, EasySource offers a solution that simplifies how you find and assess talent for exempt roles. With its intelligent features, you can quickly ensure that candidates are properly qualified for exempt positions while maintaining compliance with labor laws.
You can retain top talent, manage exempt employees with confidence, and keep a productive, legal workplace by keeping up with changes to California's labor laws and routinely reviewing your company's policies.