Salaried Employees Memo

To: All Clients
From: GJR Consulting, Inc.
Subject: Salaried Employees

Under California labor laws, there are two different types of employees: exempt and non-exempt.

  • Exempt: employees are exempt from California’s wage & hour laws, i.e.overtime, double-time
  • Non-exempt: employees are required to be paid the minimum wage, overtime,double-time (when applicable)

However, there are requirements to be considered an exempt employee:

  1. The employee must be paid a salary of no less than twice the California minimum wage based on a 40-hour workweek
  2. Primarily have executive, administrative or professional duties (“white collar” workers)
  3. Regularly and customarily exercise discretion and independent judgment on the job

Employees can be on salary, but still be considered non-exempt. A salaried employee should be paid no less than a 40-hour work week at the California minimum wage. Non-exempt employees who work over the maximum number of hours should be paid overtime even when receiving salary. Any employee that does not fulfill all three requirements to be considered “exempt” is a “non-exempt” employee and therefore all California minimum wage laws apply.

It’s important to understand that the title of an employee does not automatically qualify them as an exempt employee. Rather, it is their specific tasks and duties of their role that justifies if they are an exempt employee or not. Below is a table that details the tasks/duties of the following exempt positions according to the Fair Labor Standards Act.

  • Executive
  • -Primary duty must be managing the enterprise or customarily recognized department or subdivision-Employee must customarily and regularly direct the work of at least two or more full-time employees-Have authority to hire or fire employees or change status of other employees
  • Administrative
  • -Primary duty must be the performance of office or non-manual work directly related to management or general business operations-Primary duty includes the exercise of discretion and independent judgement
  • Professional
  • -Primary duty must be performance of work requiring advanced knowledge-Advanced knowledge must be in a field of science or learning-Advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction


You could consider when to make an employee exempt when looking at your business. Would it be beneficial to make an employee a supervisor with a little more power and avoid paying overtime on top of his/her hourly rate (assuming the rate is twice the minimum)? Should you increase an employee who you pay hourly to salary that already holds professional qualifications? How can you adjust an employee’s role to help your business and your business costs?