Who Qualifies as an Exempt Employee in California? Salary Thresholds Explained

Introduction

In California, not all employees are created equal when it comes to overtime pay, meal and rest breaks, and other wage protections. Whether you’re exempt or non-exempt under California labor law can make a significant difference in your paycheck—and in your rights at work.

In 2025, the rules surrounding exempt employees have become stricter and more employee-friendly, thanks to updates in state minimum salary thresholds and evolving interpretations of labor classifications. This guide explains who qualifies as an exempt employee in California and what you need to know to protect yourself from misclassification.

What Does “Exempt” Mean?

Being classified as exempt means that you are exempt from certain wage and hour laws, such as:

• Overtime pay

• Meal and rest break requirements

• Tracking of hours worked

This is different from non-exempt employees, who are entitled to these protections.

Employers often misclassify workers as exempt to avoid paying overtime or complying with California’s strict labor laws. That’s why it’s crucial to understand how exemption is determined.

Three Tests to Qualify as Exempt in California

To legally classify an employee as exempt in California, all three of the following tests must be met:

1. Salary Basis Test

To be exempt, you must be paid a fixed salary (not hourly) that does not fluctuate based on the number of hours worked.

You must receive the full weekly salary even if you only work part of the week—unless you voluntarily take unpaid leave.

2. Salary Level Test (2025 Threshold)

In California, the minimum salary for exempt employees is twice the state minimum wage for full-time work.

As of January 1, 2025:

• Statewide minimum wage: $16.50/hour

• Twice that for a 40-hour week:

  $16.50 × 2 × 40 hours/week × 52 weeks/year = $68,640/year

So, to qualify as exempt, an employee must earn at least $5,720/month or $68,640/year.

Note: If you work for an employer with fewer than 26 employees, the minimum wage may differ slightly. However, most California businesses will use the state threshold.

3. Duties Test

This is the most complex part—and where most misclassifications occur.

To qualify as exempt under the “white-collar exemptions” (executive, administrative, or professional roles), your primary duties must involve:

• Independent judgment

• Decision-making authority

• High-level responsibilities

Let’s break it down:

a. Executive Exemption

You must manage the business or a department, supervise at least two full-time employees, and have authority over hiring or firing.

b. Administrative Exemption

You must perform office work related to business operations (like finance, HR, or compliance) and exercise discretion and judgment regularly.

c. Professional Exemption

You must work in a field that requires advanced education, such as law, medicine, accounting, or architecture.

If your job consists mostly of manual labor, customer service, sales, or routine clerical tasks, you probably do not qualify as exempt, regardless of your title or salary.

Common Industries Where Misclassification Happens

Employers may intentionally or mistakenly misclassify employees in roles like:

• Assistant managers in retail

• Office administrators

• IT support staff

• Marketing coordinators

• Customer success representatives

Just because your job has a fancy title doesn’t mean it meets the duties test.

Why Misclassification Matters

If you’ve been misclassified as exempt, you could be missing out on:

• Overtime pay (1.5× regular rate for hours over 8/day or 40/week)

• Meal and rest breaks

• Accurate wage statements

Under California Labor Code, employees can sue for back pay, penalties, and even attorney’s fees.

How to Protect Yourself

1. Review Your Job Description:

Does your role really involve high-level decision-making, or is it mostly repetitive tasks?

2. Check Your Salary:

Are you making at least $68,640/year as of 2025? If not, you likely cannot be legally classified as exempt.

3. Track Your Hours:

If you’re working more than 8 hours a day or 40 hours a week, start documenting it.

4. Get Legal Advice:

Consult with a California employment attorney if you suspect you’ve been misclassified. Many work on contingency or offer free consultations.

What If You’ve Been Misclassified?

You may be eligible to file a wage claim with the California Labor Commissioner’s Office, or you can pursue a civil lawsuit for:

• Unpaid overtime

• Missed breaks

• Waiting time penalties

• Statutory damages

The statute of limitations for most wage claims in California is three years, but may extend to four if based on written contract terms.

Final Thoughts

California law in 2025 offers strong protections against employee misclassification, but it’s up to you to recognize the signs and take action. If your employer labels you as “exempt” but you don’t meet the salary or duties test, you may be entitled to compensation.

Need help figuring it out? Get connected to a qualified, pre-screened California employment lawyer through 1000Attorneys.com—your fast, reliable, low-cost path to legal support.