Salary Employee Laws Explained

In all workplaces, employees are either classified as exempt or non-exempt as it pertains to whether various wage and hour regulations apply to them. In general, exempt employees are those who primarily have management and decision-making responsibilities. Some common examples are executive, administrative, or professional employees as well as certain types of inside or outside salespeople. The misclassification of employees’ exempt status has been a fruitful source of overtime back pay awards won from litigation.

Job titles can often be misleading when categorizing different employee’s exempt statuses. For example, even though some employees may have an impressive job title (e.g. manager) a closer look at their responsibilities might reveal that they should be classified as non-exempt. State and federal law have created rules to define what exactly constitutes an exempt employee. These rules all have two requirements: a minimum salary requirement and a general description of job duties which the employee must exercise in order to be classified as exempt.

As for the salary requirement, all exempt employees must earn at least two times the state minimum wage for full-time employment. In California, this would compute to $2,773.33 per month. The duties requirement will vary depending on the type of employee. Generally, exempt employees customarily and regularly exercise discretion and independent judgment in their jobs. These judgments must be free from immediate supervision and must be of real and substantial significance to the policies or general operations of the business or its customers. It can also involve making recommendations for action to a superior authority. “Customarily and regularly” means frequently in the course of their day-to-day activities.