California Exempt Employee Salary Minimum (2024 Update)

What is an Exempt Employee?

According to WLC, California labor laws mandate that most employers adhere to specific regulations, such as paying overtime, monitoring hours, and providing rest breaks [1].

Some types of jobs, however, are exempt from these requirements. An exempt employee is someone whose job is not subject to one or more sets of wage and hour laws.

Determining whether a worker is an exempt employee under California law typically involves three key criteria:

1. Minimum Salary: The employee must receive a salary that is at least twice the state minimum wage for full-time employment.
2. White Collar Duties: The employee’s primary responsibilities must involve administrative, executive, or professional tasks.
3. Independent Judgment: The employee’s job duties must require the use of discretion and independent judgment.

Meeting all three requirements usually results in the employee being classified as “exempt” from overtime, minimum wage, and certain rest break requirements (though not meal break requirements). However, there are numerous exceptions and nuances to this classification test.

Additionally, some jobs are subject to a different test altogether, and certain employees may only be partially exempt, meaning they are protected by certain labor laws but not others.

Also Read: California Wage Statement Requirements

Is There a Minimum Salary for Exempt Employees in California?

According to SCLG, as of 2024, the minimum annual salary to qualify for an exempt employee in California is at least $66,560 [2]. This salary has increased significantly in recent years:

How Many Hours Can a Salaried Exempt Employee be Forced to Work in California?

In California, salaried exempt employees must be paid at least twice the minimum wage, currently amounting to a minimum annual salary of $49,920, to qualify for exempt status.

However, this exemption does not impose any legal restrictions on the number of hours salaried exempt employees can work per week, as stipulated by federal and California laws.

California labor laws also ensure that employees receive one day of rest per seven-day workweek. Employers are generally prohibited from requiring employees to work more than six days each week, with exceptions made for emergencies or when the nature of the work necessitates continuous operations.

Employers should note that providing adequate rest days to employees remains their liability even if employees voluntarily waive their right to rest days.

While there is no legal limit on the number of hours salaried exempt employees can work, employers have the option to override salaried exempt status and switch to an hourly rate under specific conditions.

For instance, if a salaried exempt employee fails to meet work requirements, an employer can legally revoke their exempt status and reclassify them as hourly, making them eligible for overtime pay.

Finally, employers are required by California law to maintain accurate records of hours worked by salaried exempt employees for three years. Employees have the right to request these records, emphasizing the importance for employers to have an organized recordkeeping system.

Also Read: California Statutory Employee

Which Wage and Hour Protections Do Not Cover Exempt Employees?

Exempt employees in California are not subject to California overtime laws.

This means that if you are classified as an exempt employee, your employer is not obligated to pay you time-and-a-half wages for working:

• More than eight hours in a workday,
• More than 40 hours in a workweek, or
• More than six consecutive days in a workweek.

Furthermore, California employers are not required to provide regular meal and rest breaks to exempt employees, as they are for non-exempt employees.

Non-exempt employees are entitled to:

• An unpaid 30-minute meal break for working more than five hours, and
• A paid 10-minute rest period for every four hours worked.

Related Articles:

• Employment Wages & Hour Dispute Lawsuits
• Is California a Right-to-Work State?
• What Is an Adverse Employment Action?

Avoiding Common Worker Misclassification Pitfalls

Worker misclassification occurs when employees are labeled as independent contractors or exempt workers. These errors can result in significant legal and financial consequences for employers.

Here are some of the most frequent misclassification scenarios to watch for:

• Treating long-term contractors as independent when they function as employees.
• Classifying all part-time workers as contractors regardless of job duties.
• Misclassifying workers to avoid providing benefits or paying overtime.
• Incorrectly applying exempt status to non-exempt employees.

Understanding these scenarios can help businesses avoid costly mistakes and ensure compliance with labor laws.

Consequences for Employers Who Misclassify Workers

Misclassifying employees can lead to severe penalties for employers. Beyond financial repercussions, businesses may face reputational damage and restrictions on future opportunities.

Key consequences include:

• Back payment of wages, overtime, and benefits.
• Federal and state tax penalties.
• Fines up to $1,000 per misclassified employee, with potential criminal penalties.
• Class-action lawsuits and significant legal fees.
• Prohibition from government contracts for repeat offenders.

Employers should prioritize proper classification to protect their operations and maintain compliance.

How to Report Worker Misclassification Violations?

Workers who believe they’ve been misclassified can take several steps to report violations. Reporting is crucial for ensuring fair treatment and holding employers accountable.

Options for reporting include:

• Filing a complaint with your state’s Department of Labor.
• Contacting the U.S. Department of Labor Wage and Hour Division.
• Reporting suspected tax fraud to the IRS using Form 3949-A.
• Filing Form SS-8 with the IRS to determine worker status.
• Utilizing anonymous reporting hotlines or online forms in states that allow it.

Each reporting avenue provides resources to address potential violations effectively.

State vs. Federal Worker Classification Requirements

Worker classification laws can vary significantly between state and federal levels. Employers must comply with both sets of standards, ensuring they meet the stricter of the two.

Notable differences include:

• Some states, like California, impose stricter classification tests, such as the ABC test.
• Penalties for misclassification are often higher at the state level.
• Reporting procedures and protections for whistleblowers differ by state.

Understanding these variations is essential for businesses operating across multiple states.

Industry-Specific Classification Rules

Certain industries have unique rules for worker classification. Employers in these sectors must be aware of specific exemptions or standards.

For example:

• Construction and transportation often have distinct guidelines.
• Creative professions may be subject to different exempt status standards.

Tailoring classification practices to industry-specific regulations can help employers avoid mistakes.

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References:

1. https://www.worklawyers.com/exempt-vs-nonexempt-employees-california/
2. https://www.shouselaw.com/ca/labor/wage-and-hour/salary-laws/