Am I An “Exempt” Employee Under California Law?

Many of California’s labor laws (such as overtime rules) may not apply to certain “exempt” employees. Exempt employees normally engage in one of three categories of work: administrative, executive, or professional.

• Administrative Exemption: Applies to those employees whose duties and responsibilities involve management policies or general business operations or the administration of a school or educational institution or department thereof and regularly exercises discretion and independent judgment.
• Executive Exemption: Applies to those employees whose duties and responsibilities involve management of a business or a portion of a business, directs the work of other employees, who has authority or has the ability to make recommendations as to the promotion, hiring, or firing of other employees, and customarily and regularly exercises discretion and independent judgment.
• Professional Exemption: Generally applies to lawyers, doctors, architects, engineers, accountants, teachers, artists, or other professions that requires advanced training and knowledge within a particular field or a requisite level of creativity. Again, such employees must customarily and regularly exercise discretion and independent judgment.

Exempt employees must earn at least two times the state minimum wage for full-time employment. There is a number of industry specific exemptions to California’s labor laws and regulations.

• Salesperson: The exemption for employees who are paid primarily in sale commissions, is relatively straightforward. A salesperson is exempt and not entitled to overtime pay if more than half of her pay is in commissions, so long as her hourly earnings are more than 1.5 times the minimum wage. See Cal. Code Regs., tit. 8, § 11040, subd. 3(D).

To read more about exempt employees, please see Labor Code, Section 515 (click here) or review the applicable Industrial Welfare Commission Wage Order for additional information (click here).