Five Differences Between Exempt and Non-Exempt Employees in California 

Employment status is confusing enough as it is without throwing around terms like “exempt” or “non-exempt.” But knowing which one you may be may make or break your bank account—are you being compensated properly for your California employment status? Do you know which kind of employee you are considered? 

What are the differences between exempt and non-exempt employees in California?

1. Non-exempt employees receive paid overtime; exempt do not. 
2. Non-exempt employees are subject to minimum wage, while exempt employees must be paid twice the minimum wage to be considered exempt. 
3. Non-exempt employees have breaks, while exempt employees do not. 
4. Most exempt employees fall into executive, professional, or administrative positions. 
5. Exempt positions must meet certain requirements to be considered exempt. 

Non-Exempt vs. Exempt Employment

A non-exempt employee is a worker who is paid a wage on an hourly basis since their job duties do not fall within an overtime exemption. These employees are eligible for breaks and overtime and are subject to California’s minimum wage laws.

An exempt employee is not eligible for overtime or for breaks, but the tradeoff is that they must be paid twice the minimum hourly wage, based on a 40-hour work week. 

This means that exempt employees could be required to work more than 40-hours without receiving overtime pay, nor would the employer have to provide any sort of breaks. 

Exempt employees are not covered by the Fair Labor Standards Act. 

Outlining these differences is key to completely understanding how each classification works within the California employment system. The following are five differences between exempt and non-exempt status, explained. 

Non-exempt employees receive paid overtime; exempt do not. 

The biggest and most glaring difference between exempt and non-exempt status is that a non-exempt employee is eligible for breaks and overtime, while an exempt employee is not eligible for either. 

California labor laws state that a non-exempt employee can receive overtime pay if they work more than eight hours in a single workday, 40 hours in a single workweek, or six days in a single workweek. 

In this case, as is most cases, overtime pay is considered time and a half of what they typically make per hour. In some cases, an employee is paid double when work exceeds twelve hours in a single workday or more than eight hours on the seventh day of the workweek. 

2. Non-exempt employees are subject to minimum wage, while exempt employees must be paid twice the minimum wage to be considered exempt. 

A non-exempt employee is subject to California’s minimum wage laws, so there is no restriction other than minimum wage on their compensation. 

An exempt employee, on the other hand, must be paid twice the minimum hourly wage based on a 40-hour work week. If they are working on commission, they must earn around $20 per hour, depending on the number of employees.

Not everyone who is paid a salary is an exempt employee. 

3. Non-exempt employees have breaks, while exempt employees do not. 

A non-exempt employee is permitted both rest and meal breaks, while an exempt employee is not. 

According to California labor laws, meal breaks and rest breaks are required based on the number of hours worked. Rest breaks are required to be ten minutes in duration every four hours and are counted as work and paid by the employer.

If an employee works more than five hours a day, they are also entitled to a thirty minute meal break; an employee can skip that break if they are not working more than six hours per day. If they work more than ten hours in a day, they are permitted a second meal break of the same duration. 

4. Most exempt employees fall into executive, professional, or administrative positions. 

The majority of exempt employees are professionals—executive or administrative employees. This is called the “white-collar exemption” and includes the categories listed previously, along with salespeople, independent contractors, and some computer or software professionals. 

According to the California Department of Industrial Relations, exempt employees typically fall into three categories: executive, where the position is involved in management with hiring authority; administrative, where the position performs non-manual labor, typically office or clerical work; and professional, where the position is licensed. 

Learn the difference between an Administrative Officer and an Administrative Assistant!

Although it varies from state to state, most exempt employees fall into one of those three categories, along with outside sale and science, technology, engineering, and math related fields. 

That being said, just because a position uses the term “administrative” or “executive” does not mean that the job qualifies to have exempt status. 

The position of registered nurse is an exception to the wage-hour exemption; they are non-exempt, which means that overtime rules do apply, unless they are working on other tasks that may allow them to meet the requirements of exempt status, like being primarily focused on administrative tasks. 

Doctors and surgeons are also exempt from overtime laws but does not include any employees covered in collective bargaining agreements. To meet the exemption laws, they must earn at least $86 per hour or the full-time salary equivalent. 

Private school teachers must primarily be teaching, must be using discretion and judgment, and must have a valid degree. They must also earn 100 percent of the lowest salary offered by any school district in California, and 70 percent of the lowest salary in the school district where the private school is located, according to California Labor Code. 

Other exempt positions fall into the “professional” category, including lawyers, dentists, architects, scientists, many in the medical field, clergy, and licensed mental health professionals—if the job requires additional learning or knowledge, it is typically exempt. 

5. Exempt positions must meet certain requirements to be considered exempt. 

There are a number of requirements that must be met before a job can be considered exempt. All positions must be qualified based on the salary requirements and duties, but they must also be primarily engaged in—or spending over 50 percent of their time on—some sort of executive, administrative, or professional job description. They must also be trusted to have good judgment while working, and must meet that salary requirement of twice the state minimum wage, based on a 40-hour work week. 

The current minimum annual salary required for an exempt employee, depending on number of employees, is between $54,000 and $58,000. 

Consequences for Misclassification

If an employer does not classify a worker properly, that worker can sue their employer for any unpaid wages, interest, damages, or attorney’s fees. 

Some employers intentionally misclassify their employees so they do not have to pay out extra overtime, provide a lunch break, or provide rest breaks. If you are a salaried employee and find that your salary is deducted when you miss work, you may be improperly classified as an exempt employee. 

Another case is salary—if your salary slips below the minimum salary requirement, you cannot be considered an exempt employee. 

If your job duties change, that is also another case that may change your position from exempt to non-exempt.

If you think you are misclassified, you cannot be fired or retaliated against for reporting the misclassification. 

An employer cannot force you to become non-exempt or exempt—if they attempt to make you sign a contract making you one or the other, that contract is invalid. The position itself is classified based on salary, duties, and judgment as listed above.  

There are many different types of exemptions under California law. To find out more about whether you could be considered exempt or if you are considering a job that may have exemptions, look over the exemptions from overtime laws information at the California Department of Industrial Relations website. 

RELATED QUESTIONS

Is it better to be an exempt or non-exempt employee?

Whether it is better to be exempt or non-exempt is up to personal preference; exempt employees are not paid overtime, know more about their job, and have set responsibilities, but have higher pay rates and there is really no legal way to deduct pay for hours that are not worked. Non-exempt employees receive pay for overtime, but do not receive the higher pay rate. 

How much do you have to make to be an exempt employee in California?

To be an exempt employee in California, you must be compensated a minimum salary of no less than two times the full-time employment state minimum wage. 

Can employers require exempt employees use paid time off or sick leave for partial-day absences?

According to the Fair Labor Standards Act, employers are allowed to require employees to use paid time off, sick leave, or vacation leave without affecting their exempt status. 

Can my employer furlough me if I am an exempt employee?

In California, an employer can furlough an exempt employee or reduce salaries and hours, according to the Fair Labor Standards Act. The FLSA requires, though, that they must be compensated for the entire workweek if the employee performs any work during that week, or they may lose exemption status.  

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Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.