What are the 5 Exempt Employee Classification, California?

Under California law, all employees are presumed to be non-exempt, and if a claim is filed, the employer has the burden of proving the employee is exempt. An exempt employee is so-called because they are exempt from benefits, such as overtime and wage and hour requirements. There are strict conditions around the exempt status, and the employer must pay attention to what they are exempt from and what conditions still apply. Employment lawyers or HR professionals can advise on this.

This article will cover the 5 most common employee exemptions under California law.

Exemption 1 – Manager or Executive

Executives and managers are exempt if they meet all of these requirements:

• The employee is responsible for managing a department of the company.
• They manage at least two employees.
• They have the authority to fire or hire employees or their recommendations for recruiting, or promotion is given weight.
• The employee is able to and regularly exercise independent judgement and discretion in their duties.
• Their primary duties meet the exemption test. These are the duties that make up 50% or more of their daily duties.
• The employee’s monthly salary is at least two times the full-time state minimum wage.

Exemption 2 – Administrative Professional

Administrative professionals must meet all of the following requirements to be exempt:

• 50% or more of their duties must be administrative in nature, such as general business operations or management policies.
• The employee is able to regularly exercise independent judgement and discretion in duties which are significant to the business operations.
• They perform their duties with only general supervision, and their duties require specific technical knowledge or experience.
• Their salary is at least twice the minimum wage.

Exemption 3 – IT Professional Exemption

IT professionals must meet all of the following requirements to be exempt:

• The primary duties of the employee are creative or intellectual in nature.
• Their primary duties are one of the following:
  • Applying systems analysis procedures and techniques
  • Testing, modifying, documenting, or creating computer programs
  • Designing, analysing, creating, developing, or modifying computer programs or systems.
• The employee is highly skilled in the practical and theoretical application of specialised IT knowledge.
• The hourly rate or annual salary must meet the DLSR’s minimum threshold.

Exemption 4 – Inside Sales Employees

Inside sales employees must meet all the following requirements to be exempt:

• Employee’s wages or salary must be at least 1.5 times California’s minimum wage.
• At least 50% of the employee’s compensation is commission.

The inside sales exemption only applies to overtime, and the employee must still receive benefits such as meal and rest breaks, minimum wage, and time recording.

Exemption 5 – Outside Sales Employees

Outside sales employees must meet all the following requirements to be exempt:

• The employee must be 18 years old or over.
• 50% or more of their work time must be performed away from the employer’s workplace.
• The employee’s main duties must involve selling service, contracts for products, tangible items, or facility use.