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Exempt Employees: Your Rights Under California Labor Law

Updated: Nov 11

What Does Being "Exempt" Mean In California?


There are two categories of workers in every workplace: excluded and non-exempt. Employees who are excluded from minimum wage and overtime pay provisions are known as the former. This is because excluded workers are paid on a salary rather than by the hour and serve in executive or technical positions. Year-end incentives are often given to exempt workers to compensate for the type of job they do and any extra work. A California Employment Attorney might be able to get you through the process of reclaiming your employment rights.


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Most employers are required by California labor laws to obey such regulations, such as paying overtime, recording hours, and offering rest breaks. The statute, on the other hand, allows for several significant exceptions to these provisions. An employee who is excluded from one or more of these exceptions is known as an exempt employee in most situations.


To decide if a worker is covered by a wage and hour exemption under California law, there are typically three basic requirements:

  • Minimum Wage.

  • For full-time jobs, the employee must be paid a salary that is at least double the state minimum wage.

  • Duties of a White Collar Employee.

  • Administrative, executive, or technical roles must be the employee's primary responsibilities.

  • Independent Judgment.

  • The employee's job responsibilities must include independence and independent judgment.

If all three conditions are met, the employee will almost always be exempt from California's overtime, minimum wage, and rest break laws (but not meal break requirements). This exam, however, comes with many caveats.


Some workers are often subjected to a different set of requirements. Furthermore, certain workers are only covered by such wage and hour exceptions, which means they are shielded by certain labor laws but not others.


What Impact Do Exceptions to Wage and Hour Laws Have on Employees?


Overtime Compensation


For any hour worked more than 40 during a workweek, federal law mandates employers to pay most workers an overtime rate of at least one-and-one-half times their normal hourly wage. Unless the employees are subject to an exception to California's wage and hour laws (in which case the two sets of laws are nearly equal), California law protects workers to a greater extent than federal law.


California's overtime laws mandate employers to pay one-and-a-half times their normal hourly rate of pay to workers who are not subject to wage and hour exceptions for:

  1. In a single workday, all hours worked more than 8

  2. In a single workweek, all hours worked more than 40

  3. The employee worked the first eight hours on the seventh consecutive day of work in the workweek.

Employers in California are forced to pay workers who are not exempt from wage and hour laws double their normal hourly rate for All hours worked more than 12 in a single workday, and on the seventh consecutive day of work in the workweek, all hours worked more than 8.


Commissions on sales


Even if your boss refers to it as a bonus or anything else, any reward tied to your sales is a sales commission. The requirements for receiving the fee and the calculation formula must be written in commission plans. You are due a fee if you make a sale and fulfill all of the conditions of your commission contract. After the fact, the employer cannot adjust the schedule or argue that the commission plan is discretionary. You might be due any or all of your commissions for sales you made even though you left or are fired before the payout deadline. Furthermore, as previously mentioned, some inside salespeople are owed overtime, and the commission is factored into your overtime rate in such cases.


Employees that are tipped


Employees are entitled to their tips except for automatic gratuities on the bill that the client does not decide. As long as the tip pooling scheme is fair, an employer is entitled to pool tips and allocate them to all employees who delivered a service (in the case of restaurants, this includes cooks and dishwashers). Still, managers and owners are not allowed to take tips for themselves. Tips are not included in the minimum wage calculation.


Right to a Meal Break


If employees work more than 5 hours daily in California (including most workers subject to wage and hour exceptions), they are entitled to an unpaid 30-minute meal break. A second meal break is required if an employee works more than 10 hours a day.


Employees can agree (with their employers) to waive the first meal break if they work less than 6 hours a day. If they usually work less than 12 hours a day and the first meal break is not waived, they can both agree to waive the second meal break. The employee must be relieved of all responsibilities and be able to leave the workplace during the meal break. The employee must be charged for the meal break if he or she is expected to stay on the employer's premises or work site.


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Employers must pay an additional one hour of pay at the employee's normal hourly rate if they fail to offer a meal break to their employees. For their employer's inability to provide them with missed meal breaks, the employee can only be paid an additional hour per workday.

Meal breaks may have certain exceptions, but the key exceptions mentioned in this article (those that apply to corporate, managerial, and technical employees) do not apply to meal breaks.


Right to a Rest Break


Employees in California that are not covered by wage and hour exceptions are often entitled to a paid 10-minute break in the middle of each 4-hour shift.

When an employee works less than 3.5 hours a day, they are not entitled to a rest day.

Employers are allowed to pay an additional one hour of pay at the employee's normal hourly rate if they fail to give a rest time to an employee. The employee can only be paid an additional hour per workday for their employer's inability to provide them with a missed rest time.


Their employers must give lactating mothers who wish to express breast milk for their children fair breaks. If a lactation break is taken during an employee's daily rest time, it must be compensated. They may not have to be compensated if they last longer than or in addition to the normal rest time.


Wage Statements and Meal and Rest Breaks


Non-exempt workers are entitled to a 30-minute unpaid meal break for every 5 hours worked and a 10-minute paid rest break for every four hours (or any fraction of time over two hours) worked. You can skip the meal break if you work less than six hours. Working more than six hours a day makes it very difficult for an employer to waive breaks. When your employer informs you that a break waiver is in effect, you can consult with a Los Angeles Employment Lawyer to determine if your rights are being violated.


Employers must provide compensation statements to non-exempt workers that accurately reflect the number of hours worked, salary rate, and subsequent pay. If your employer fails to provide you with a proper pay statement, it could mean you are not being paid properly, and you should seek legal advice.


Identifying whether an employee is entitled to a Wage and Hour Exception


To decide whether a worker is subject to one or more of these exceptions in California, there are normally three basic requirements:

  • Minimum Wage.

  • For full-time jobs, the employee must be paid a salary that is at least double the state minimum wage.

  • Duties of a White Collar Employee.

  • Administrative, executive or technical roles must be the employee's primary responsibilities.

  • Independent Judgment.

  • The employee's job responsibilities must include independence and independent judgment.

Several types of exceptions relate to particular jobs in addition to this three-part exam. Commissioned workers, Physicians and Surgeons, Computer Technicians, Private School Teachers, Outside Salespersons, Truck Drivers, and Union employees are among the most frequent job-specific exceptions.


These exceptions to the rule have their own examinations (distinct from the three-part test mentioned above). And some of them are only partially exempt from California's wage and hour laws.


Employers can only argue that an extraordinary situation occurs if an employee "plainly and unmistakably" fits the criteria for the exemption. If there is any ambiguity, the law usually allows the employee to be listed as a normal employee (one that is not subject to a wage and hour exception).


The Minimum Wage Requirement


Generally, if an employee is paid on a salary basis (rather than an hourly wage), the salary must be at least double the state minimum wage for full-time jobs to qualify for a wage and hour exception.


The Term "Salary"


For these reasons, a salary is an unchanging minimum wage. The employee's wages must be predetermined and cannot differ depending on the number of hours employed or the quality of the job done. According to the courts, employers can subtract from an employee's wages for full-day absences and still consider the employee to be compensated on a salary basis. But, if the employer deducts for partial-day absences, the employee is no longer deemed "salaried."


The employee will be classified as an hourly employee (and therefore not subject to these exceptions) if his or her salary depends on the number of hours worked with no minimum guarantee.


Making a Minimum Salary Calculation


As previously stated, California law mandates that a full-time employee be paid at least double the state minimum wage to be eligible for wage and hour exceptions. Full-time employment is defined as 40 hours a week for these purposes, and the employer's size currently determines the applicable minimum wage.

The applicable minimum wage must be multiplied by two and then multiplied by 40 hours a week to satisfy the minimum payment threshold for excluded workers. This means we'll be paid twice as much as the minimum wage per week.

Importantly, until 2023, California's minimum wage will rise every year on January 1st. As a result, the minimum wage for excluded workers in California will rise every year. Your California Employment Attorney will know how to thoroughly explain the calculation process.


Requirement for White Collar Duties


If the wage criteria are met, the next step is to determine if the employee is working in an administrative, executive, or technical capacity, also known as the "white-collar duties" test.


We look at the duties an employee actually performs—regardless of job title or how the job is described in a work description—to decide whether they are working in an administrative, executive, or professional capacity.


The white-collar duties test, for example, focuses on the employee's primary responsibilities. To pass this examination, an employee must devote more than half of his or her working hours to the primary responsibility.


Employees who pass this exam are eligible for wage and hour exceptions for a variety of rights, including:

  • The right to ten-minute rest periods, as well as overtime pay