Misclassified as Exempt in California? The Salary and Duties Tests

In California, you are only exempt from overtime if you earn at least the minimum exempt salary ($70,304 a year in 2026) and spend more than half of your working time on genuinely exempt duties. A salary, a “manager” title or a signed job description is not enough. If you fail either test, you are a non-exempt employee entitled to overtime, meal and rest breaks, and every other wage protection.

Misclassification can be worth a great deal. A salaried assistant manager earning $72,000 who regularly works 50 hours a week could be owed about $26,000 a year in overtime alone, and roughly $78,000 over the three-year limitations period, before penalties and interest.

This guide explains the salary test, the duties tests for the executive, administrative and professional exemptions, the special rules for computer professionals and salespeople, the jobs most often misclassified, how back overtime is calculated, the defenses employers raise, deadlines, and what to do next.

Exempt vs. non-exempt: the basic rule

California’s overtime law, Labor Code 510, applies to every employee unless the employer proves an exemption applies. The main exemptions, often called the “white-collar” or EAP exemptions, are the executive, administrative and professional exemptions in Labor Code 515 and section 1 of the IWC wage orders.

To qualify, a job generally must meet two separate requirements:

• The salary test: a fixed salary of at least twice the state minimum wage for full-time work.
• The duties test: the employee must be “primarily engaged” in exempt duties, which Labor Code 515(e) defines as more than one-half of the employee’s work time, and must regularly exercise discretion and independent judgment.

California’s tests are stricter than federal law. The federal rules use a looser “primary duty” test, while California counts actual hours. And exemptions are narrowly construed: the employer has the burden of proving that each requirement is met.

By the numbers$70,304

The salary test in 2026

For 2026, California’s minimum wage is $16.90 an hour. Twice that for a 2,080-hour full-time year is $70,304 a year, or about $1,352 a week. An employee paid less than that cannot qualify for the executive, administrative or professional exemptions, no matter what their duties are.

The salary must be a predetermined amount that is not reduced because of the quality or quantity of work. Frequent deductions from a salary for partial-day absences or slow weeks can undercut the claim that you are truly salaried.

Some cities set higher local minimum wages, but the exempt salary threshold is based on the state minimum wage. Meeting the salary test is only the first step. Many employees earn well above $70,304 and are still non-exempt because their duties don’t qualify.

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The duties tests

Exemption	Key duties requirements (in addition to the salary test)
Executive	Primarily manages the business or a recognized department; customarily and regularly directs the work of two or more employees; has authority to hire or fire, or has recommendations that are given weight; regularly exercises discretion and independent judgment
Administrative	Performs office or non-manual work directly related to management policies or general business operations; regularly exercises discretion and independent judgment on matters of significance; works under only general supervision
Professional	Licensed or certified and practicing in law, medicine, dentistry, optometry, architecture, engineering, teaching or accounting, or primarily engaged in a learned or artistic profession; regularly exercises discretion and independent judgment

In every case, more than half of your actual working time must be spent on the exempt work. In Ramirez v. Yosemite Water Co. (1999), the California Supreme Court held that courts should look at how the employee actually spends their time, considering the employer’s realistic expectations, not just the job description.

That is where many classifications fail. An assistant store manager who spends six hours a day running a register, stocking shelves and helping customers is doing mostly non-exempt work, even if they also make the schedule and train new hires.

Computer professionals and salespeople

Computer professionals have their own exemption in Labor Code 515.5. It covers highly skilled employees primarily engaged in work such as systems analysis, programming and software design that requires theoretical and practical application of specialized knowledge. For 2026, the employee must be paid at least $58.85 an hour, or a salary of at least $10,214.44 a month ($122,573.13 a year). Help-desk staff, trainees and employees who mainly operate or repair computers generally do not qualify.

Outside salespeople are exempt if they spend more than half of their working time away from the employer’s place of business selling or obtaining orders or contracts. Inside sales staff are not covered by that exemption.

Commissioned inside salespeople under certain wage orders (such as retail and mercantile) are exempt from overtime only if they earn more than 1.5 times the minimum wage and more than half of their pay comes from commissions. That exemption covers overtime only; meal and rest break rules still apply.

Registered nurses are generally not exempt as professionals (Labor Code 515(f)). See our guide to 12-hour shifts and overtime for healthcare rules.

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Jobs that are often misclassified

• ✅ Assistant managers and store managers who spend most of the day doing the same work as hourly staff.
• ✅ “Coordinators,” “specialists” and “analysts” who follow set procedures rather than making significant independent decisions.
• ✅ Customer service, inside sales and account representatives paid a salary.
• ✅ IT support and junior technical staff who don’t meet the computer professional test.
• ✅ Supervisors and leads in warehouses, restaurants and construction who work alongside their crews.
• ✅ Recruiters, schedulers and administrative assistants labeled “administrative” without real discretion.

Misclassification also happens in the other direction: workers called independent contractors who are really employees. If that sounds like your situation, see our guide on the ABC test.

Key fact

What you can recover

A misclassified employee is treated as non-exempt for the entire period and can generally recover:

• Overtime at 1.5× for hours over 8 a day or 40 a week, and double time over 12 a day (Labor Code 510). For a salaried non-exempt employee, the regular rate is generally the weekly salary divided by 40 (Labor Code 515(d)).
• Meal and rest break premiums of one hour of pay for each day breaks were not provided (Labor Code 226.7). Our guide to meal and rest break premiums explains how these add up.
• Wage statement penalties up to $4,000 (Labor Code 226(e)) and, for former employees, waiting-time penalties of up to 30 days’ wages (Labor Code 203).
• Interest and attorney’s fees (Labor Code 1194).

💡 Example: Carlos is an “assistant manager” paid $72,000 a year who works five 10-hour days a week, mostly on the sales floor. If he is non-exempt, his weekly salary is $72,000 ÷ 52 = $1,384.62, and his regular rate is $1,384.62 ÷ 40 = $34.62 an hour. His overtime rate is $51.92. With 10 overtime hours a week, he is owed about $519 a week, roughly $25,960 over 50 weeks, and about $77,900 over three years, before break premiums, penalties and interest.

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Employer defenses and deadlines

Employers commonly argue that the employee had a manager title, signed an exempt job description, was “paid enough,” or was responsible for the store or team. None of these settles the question. The test is what you actually did and how you spent your time. Employers also argue that employees didn’t record their hours; but an employer that treats employees as exempt doesn’t track their time, and courts allow reasonable estimates based on schedules, emails, badge data and testimony.

Some employers quietly reclassify a position as non-exempt once they realize there is a problem. Reclassification going forward does not erase overtime that was already owed for past work. If your title, pay structure or timekeeping suddenly changed, keep the old documents; they can help show how long the misclassification lasted.

Overtime claims generally must be brought within three years (Code of Civil Procedure 338), or up to four years under the Unfair Competition Law (Business and Professions Code 17208). Wage statement penalties and PAGA claims have one-year deadlines. Each week that passes can push older overtime outside the window.

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What to do if you think you’re misclassified

1. Track your hours starting now: start and end times, breaks, and work after hours.
2. Describe a typical day in writing, with rough percentages of time spent on each task.
3. Save your offer letter, job description and pay stubs, and any emails showing your hours or duties.
4. Request your personnel file and payroll records in writing (Labor Code 1198.5 and 226).
5. Don’t confront your employer alone. Talk to a wage and hour attorney about how to raise the issue and protect yourself from retaliation. Our wage and hour calculator can help with a first estimate.

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Misclassification is often the tip of the iceberg

When one job title is misclassified, everyone in that title usually is. That makes exempt misclassification one of the most common types of wage and hour class action and PAGA case in California. It also tends to come with other violations, since employers that treat employees as exempt usually don’t provide meal and rest breaks or track hours. Our wage and hour attorneys evaluate the full claim.

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Frequently asked questions

I’m paid a salary. Doesn’t that make me exempt?

No. A salary is only one requirement. You must also meet a duties test, spending more than half your time on exempt work.

My salary is over $70,304. Am I exempt?

Not necessarily. Many highly paid employees are non-exempt because their actual duties don’t meet the executive, administrative or professional tests.

I signed a document agreeing that I’m exempt. Does that matter?

No. You can’t waive your right to overtime by agreement (Labor Code 1194, 219). Your classification depends on the law, not the paperwork.

Can I be fired for asking to be reclassified?

No. Complaining about unpaid overtime is protected activity (Labor Code 98.6 and 1102.5).

Can I still bring a claim if I’ve left the company?

Yes, generally within three years of the unpaid overtime, and former employees may also be owed waiting-time penalties.

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