Labor Laws for Exempt Employees

The California Department of Industrial Commissions enforces the wage and hour laws for both private and public companies. That said, all businesses in California must comply with the minimum hourly wage and annual salary laws.

California employers are subject to fringe benefit regulations for salaried employees in addition to the wage laws. California labor laws for exempt employees set the rules for salaried workers in that state.

Who are Salaried Employees?

Salaried employees are also known as exempt employees. These employees are eligible for a monthly or weekly salary. However, they shouldn’t be confused with non-exempt salaried employees. 

The term “exempt” means that exempt or salaried employees cannot work overtime. By law, exempt employees can’t bring a claim against their employers for working overtime without consideration. However, there’s an exception to this rule.

Salaried employees should receive a minimum annual salary of $35,568.  They’re entitled to overtime pay in some special circumstances. Exempt employees can only receive overtime pay in emergencies and with the consent of the employer. 

As per the Department of Industrial Commissions, annual paid vacations aren’t mandatory. However, employees can receive unearned vacation time calculated on a prorated basis if the company policies allow it.

Overtime and Termination Pay for Exempt Employees

As per California termination laws, employees who are forced to resign are entitled to earned wages and payment in lieu of vacation time. On the other hand, employees who resign voluntarily should give a 72-hour resignation notice to employers. 

If the resignation notice isn’t given within the stipulated time, resigning employees should receive their dues within 72 hours of their last day at work. Vacation earnings are based on annual salaries multiplied by the number of vacation days the employee is eligible for in a year.

Salaried employees can only receive overtime pay if they’re classified as nonexempt employees. Executives and administrators are considered exempt employees under the federal Fair Labor Standards Act. 

Hourly Employees

Employees who receive a predetermined hourly rate are known as hourly employees. The features of hourly employees are:

• Wages are based on the number of work hours completed in a day or week.

• Hourly employees must be paid a minimum wage—the higher of state or federal provision.

• Hourly employees are classified as non-exempt employees.

• They are eligible for overtime pay thanks to their classification. 

•  Overtime starts after 40 hours of work in a week.

• Company policies determine whether hourly workers qualify for benefits.

Exceptions and Limitations

The California Labor Code requires employers to pay IT professionals a minimum of $75,000 each year. Otherwise, these employees are eligible for overtime compensation. 

Salaried employees have a right to decline working overtime if they’re required by employers to work more than 72 hours in a week.

Employee Classification 

Employee classification should be based on job duties and pay. California employees are either exempt or non-exempt. Employment classification is used to determine the rights, obligations, and protections of workers outlined under the Fair Labor Standards Act and labor laws.

Non-Exempt Employees 

Non-exempt workers are protected under the Wage and Hour provisions of the FLSA. The Wage and Hour Division regulates agreements between employers and these types of employees. Private and public companies must comply with these laws.

Non-exempt employees must receive pay equivalent to their work. These workers are entitled to the minimum wage as set by the labor law. The current federal minimum hourly rate is ​$7.25​. However, the minimum wage in most states is higher than the federal minimum. In 2021, 30 states had a higher minimum wage while the minimum wage for 15 states equaled the federal minimum wage. Non-exempt employees can seek legal recourse if labor regulations are violated by their employers.

Non-exempt employees are entitled to fair remuneration, meaning all work hours, including overtime, must be compensated. Employees working more than 40 hours in a workweek should receive overtime pay as per the U.S. Department of Labor. Overtime pay is calculated as one and a half times an employee’s regular pay rate. Good employers use a double pay rate for overtime work done on holidays.

Violation of Labor Laws for Exempt Employees

Violating the labor laws for exempt employees is considered an offense in California. Understanding California labor law is the first step toward protecting your employment rights. 

Sadly, most employees are clueless when it comes to their rights. That said, rogue employers take advantage of this ignorance and subject unsuspecting employees to exploitation.

Employees should seek legal recourse for the violation of their rights. An employment attorney can help you bring an employment claim against your employer and recover damages for workplace exploitation. Also, you can file an additional claim if your employer retaliates against you for exercising your constitutional rights.

Understanding your rights helps you avoid exploitation in the workplace. Consult a labor lawyer if your rights have been violated.