Exempt employee

What does “exempt employee” mean?

An exempt employee is one who is not entitled to overtime pay because their role satisfies both a duties test and a salary threshold, and it is the duties actually performed, not the job title, that decides it.

California applies its own exemption tests, which are generally narrower than the federal ones. The common exemptions cover executive, administrative and professional roles, each with its own definition of the work that must make up the majority of the employee's time.

The recurring failure is drift. A role is classified when it is created, the duties change over two or three years, and nobody revisits the classification. The title still says manager; the work no longer matches.

Why it matters to an employer

Misclassification is expensive because it compounds: unpaid overtime accrues for every affected person, every pay period, for as long as the classification has been wrong.