California Labor Laws for Salaried Employees
Navigating California labor laws for salaried employees can be challenging, especially if you want to stay compliant with state labor laws and keep your workforce happy.
This guide will help you understand the key aspects of California labor law when applied to salaried employees. We’ll address topics such as work hours, overtime rules, and employee rights and explore how using time tracking solutions can help you remain compliant.
What is a salaried employee?
To understand California labor laws for salaried employees, it’s important that we define what a salaried employee is.
Put simply, salaried employees are workers that are paid at a predetermined rate at weekly, bi-weekly, or monthly intervals. Their paycheck remains the same, regardless of whether they’ve worked more or less than a 40-hour week.
However, California further defines salaried employees by categorizing them as either “exempt” or “non-exempt.”
Determining an employee’s exemption status depends on their job, pay rate, and payment structure. Exemption classifications are one of the most important aspects of California labor laws for salaried employees.
Exempt vs. non-exempt: Why classification matters and what you need to know
California requires you to correctly categorize salaried employees as exempt or non-exempt.
Exempt salaried employees must be paid a weekly salary that will not fluctuate based on the number of hours worked or tasks completed.
Under the Fair Labor Standards Act, the national minimum weekly salary for an exempt employee must be no less than $844, or $43,888 annually.
However, California increases salary demands and requires employees receive a minimum weekly salary of $1,280, or $66,560 annually, for businesses with 26 or more employees.
Although non-exempt employees are salaried, they do not receive a minimum weekly salary amount, however, they must earn at least the federal or state minimum wage — whichever is higher. This ensures adequate compensation for their time and effort.
Important Update: As of July 1, 2024, federal overtime regulations have changed. To qualify for exempt status, the current minimum weekly salary is now $844. This rate will increase again to $1,128 on January 1, 2025. While California maintains a higher salary threshold, these major federal changes could impact how you classify certain employees. Make sure you stay up to date on the latest regulations and consult with legal or HR advisors if needed.
How many hours can an exempt salaried employee work in California?
In California, a full-time workweek is typically between 32 and 40 hours, although the Affordable Care Act (ACA) considers an employee at full-time status if they work 30 hours or more.
There is no limit as to how many hours an exempt salaried employee can work in any given day or week. These employees earn a consistent salary, regardless of the number of hours worked.
However, to be classified as exempt, salaried employees must meet specific duty requirements and earn at least twice the state’s minimum wage in a standard 40-hour work week.
How many hours does a salaried employee have to work in a day?
In California, there's no specific law mandating how many hours a salaried employee must work in a day. However, employers should avoid unreasonably long workdays to prevent issues related to worker safety and fatigue.
How many hours can a salaried exempt employee be forced to work?
While there's no federal law explicitly limiting the number of hours a salaried exempt employee can be forced to work, there are some factors to consider:
- State and local laws: Some states and localities have specific laws regarding maximum work hours, even for exempt employees. These laws can vary widely, so it's important to check your local regulations.
- Employer policies: Your employer may have internal policies regarding work hours, including overtime or maximum workweek expectations.
- Employee health and well-being: While legal, excessive work hours can lead to burnout, decreased productivity, and potential legal issues related to workplace safety.
It's important to note that even exempt employees may have protections against excessive work hours under other labor laws, such as those related to workplace safety or discrimination.
What are the minimum wage laws in California?
Employers in California must pay employees the highest minimum wage rate that can be found at the federal, state, or local level.
As of January 1, 2024, California’s minimum wage stands at $16 per hour. Looking ahead to 2025, fast-food workers in California can expect a minimum wage increase to $20 per hour.
Right now, California’s minimum wage rate trumps the federal rate, which applies to all businesses within the state.
However, several cities and counties have established their own minimum wage laws. For example, the minimum wage rate in Berkeley is $18.67, while Emeryville’s minimum wage is $19.36.
Note: If a city or county in California establishes a higher minimum wage, this new rate becomes the standard for employers operating within that jurisdiction.
Salaried employees and overtime pay in California
Under California wage law, employees that work over 8 hours in one day or over 40 hours in a work week are entitled to overtime pay. Just because an employee is salaried does not automatically disqualify them from receiving overtime pay.
While exempt salaried employees do not qualify for overtime pay, non-exempt salaried employees do. It’s up to the employer to prove that an employee’s salary meets overtime exemption criteria.
Overtime pay for non-exempt workers in California is equivalent to 1.5x the employee’s regular rate of pay. If an employee works more than 8 hours per day or works seven days in a row, all additional hours are paid at the overtime rate. In the event an employee was to work more than 7 days in a row, their overtime pay will be doubled.
Navigating overtime eligibility
Making the distinction between exempt and non-exempt salaried employees is crucial for effective wage management in California.
Most class action lawsuits are a result of employer’s incorrectly classifying employees as non-exempt or exempt from overtime.
Non-exempt salaried workers and overtime
Non-exempt salaried employees fall under the minimum wage and overtime stipulations outlined by the Fair Labor Standards Act (FLSA). Employers are required to specify many hours these employees are expected to work weekly.
Non-exempt salaried employees are entitled to overtime pay equivalent to 1.5x their regular rate of pay when the following conditions occur:
- The employee works more than 8 hours in a single work day
- The employee works seven or more consecutive days.
- The employee works more than 40 hours in a standard work week.
Non-exempt salaried workers earn double overtime wages when they work more than 12 hours in a single workday or more than 8 hours on their seventh consecutive day of work.
To determine the exact overtime rate for your salaried employees, follow this three-step guide:
- Determine the annual salary. Multiply the employee’s monthly income by 12 to get the annual salary.
- Determine the weekly salary. Divide the annual salary by 52 to determine the employee’s weekly earnings.
- Calculate the hourly rate. Divide the employee’s weekly salary by 40 which is the maximum amount of regular hours that can be worked in a week.
Keep in mind, employers must keep accurate records of any hours their non-exempt employees work to issue fair compensation and avoid potential legal consequences.
Exempt salaried workers and overtime
Exempt salaried workers are often considered eligible for overtime pay. But qualifying for overtime pay is more complex than simply meeting the minimum salary requirement.
Not only must an employee meet minimum salary requirements to be classified as exempt, they must also pass job duty and salary basis tests.
Even if an employee’s salary exceeds the minimum threshold, they could still be considered non-exempt and qualify for overtime compensation, if they fail to meet job duty tests.
Salaried positions that are usually exempt include professional employees, managerial positions, white-collar workers, and certain independent contractors.
However, the final say in exemption is grounded in the specifics of job functions as established by California labor code. For example, administrative or executive employees may be exempt if their role is primarily managerial and includes significant judgment and decision-making authority.
When are salaried employees exempt from overtime?
Whether or not a salaried employee is exempt from receiving overtime pay is determined in part by California’s overtime laws.
Below are the conditions that must be met for an employee to be considered exempt from overtime.
- Minimum salary requirement: If your company employs more than 26 workers, the employee in question must earn at least $1,280 per week or $66,560 annually.
- Salary Basis Test: The employee must be paid a consistent salary, irrespective of the number of hours worked or the amount of work completed.
- Job Duties test: The employee’s primary job responsibilities must be executive, administrative, or professional. They should also have substantial authority to make decisions for the business.
Let’s take a look at a few real world examples below, and determine if the individuals in each story meet the criteria to be considered exempt.
Sarah, the Store Manager
Sarah is the manager of one of your stores, whose earnings are $70,000 per year. While her salary meets the minimum salary requirement, her primary job responsibilities include sales and stocking shelves rather than managerial tasks. In this case, Sarah would not be exempt from overtime pay because she does not pass the Job Duties Test.
Alex, the Software Engineer
Alex is a software engineer in your tech firm, who earns $100,000 annually. His job duties consist of no managerial tasks, but instead focus on coding and software development. Alex passes the Job Duties Test since his position is specialized. Additionally, Alex meets the minimum salary requirement and passes the Salary Basis Test, which means he is exempt from overtime pay.
Mark, the Assistant Manager
Mark is an assistant manager at your restaurant earning $50,000 yearly. He completes managerial tasks like scheduling but has no significant decision-making powers. Although his specific job duties almost put him in the administrative category, he fails to meet the Job Duties Test criteria and is considered non-exempt.
Are salaried employees entitled to breaks in California?
Many employers assume that salaried employees do not have to be given breaks. The truth is that although break specifics can vary based on exemption status, salaried employees in California are entitled to breaks just like other workers.
Failing to correct this misconception can lead to unintentional labor law violations.
Meal breaks: A right for most, including exempt employees
According to California break laws, nearly all employees, including exempt salaried employees, are entitled to an unpaid, 30-minute meal break if they work more than five hours per day. A second 30-minute break is given to employees that work over 10 hours.
During these breaks, employees should be free to leave the premises and must be entirely relieved of all work responsibilities.
Rest breaks: A complex issue for exempt employees
While most employees in California are entitled to rest breaks, exempt employees exist in a unique bracket here. California statutes state that exempt employees are not automatically granted rest breaks.
Whether or not exempt employees receive rest breaks depends on a variety of factors such as, specific job duties and terms stipulated in the employment contract.
Do salaried employees have to use a time clock in California?
When it comes to clocking in and out through a time clock, salaried employees often find themselves surrounded by myths and half-truths.
One prevalent myth is that salaried employees, particularly those classified as exempt, are free from the rigors of time-tracking.
Below, we’ll investigate this myth and share facts that answer whether salaried employees need to clock in and out each day.
The law and its loopholes
In California, the law does not mandate salaried employees, even those that are exempt, to clock in and out. It’s up to the employer to decide if salaried employees should utilize a time clock each day.
However, non-exempt employees — even those that are salaried — must adhere to time-tracking requirements. Federal and state legislation compels employers to document the working hours of all non-exempt employees rigorously.
Why clocking in and out makes sense for everyone in California
Given California’s pro-employee stance, the stakes for failing to meet legal obligations are significantly higher for employers in the state. As the law requires, employers must keep track of their employees’ working hours, including the exact clock in and out times as well as accurate break records.
Accurate time tracking is a mutually beneficial practice. Employees are compensated fairly for their time, and employers minimize the risk of costly legal ramifications.
Mileage and expense reimbursement
Following California Labor Code 2802, employers must compensate workers for all business expenses. This includes costs associated with using a personal vehicle for work-related purposes.
There are several ways to calculate reimbursement: car allowance, reimbursement based on actual mileage, or reimbursement based on fixed and variable rates - FAVR. Regardless of the method used, employees are entitled to full compensation under California’s labor laws.
A reliable mileage tracker, like Timeero, can help employers track and compensate their employees accurately for the expenses incurred while using their cars for business purposes.
Equal and fair pay: Legal imperatives in California
Equal work for equal pay is a legal and ethical concept that employers in California should prioritize. Two pieces of legislation, the California Equal Pay Act and the Fair Pay Act, have made issuing fair and equal pay non-negotiable.
California’s Equal Pay Act prohibits employers from paying employees less than their counterparts of the opposite sex for substantially similar work.
The Fair Pay Act builds upon the Equal Pay Act by adding layers of accountability concerning race and ethnicity.
Employers in California are legally obligated to offer equal pay for “substantially similar work,” even if the employees’ job titles vary. Violating these laws can result in substantial legal consequences, including fines and back pay.
Be transparent to attract top talent and issue fair wages
According to California’s pay transparency laws under Senate Bill 1162, employers with more than 15 employees are mandated to include a salary range in all job postings. The pay transparency rule aims to minimize wage discrimination by providing applicants with a transparent view of job specific details.
PRO TIP: Being transparent when it comes to disclosing salary levels isn’t just about meeting legal stipulations. Transparency in the workplace builds a culture of trust among your employees.
How can Timeero help me comply with California labor laws for salaried employees?
Ensuring compliance with California break law becomes more straightforward when you use a compliant break tracking solution.
A GPS time tracking app like Timeero can transform how you manage your business and encourage compliance with California’s labor laws.
Below are a few ways Timeero can help your company comply with California labor laws.
- Salaried employees can use the Timeero mobile app to track their work hours. As an employee clocks in/out on their phone, the app automatically creates their time card. This means, no more chasing employees around for their timesheets and less manual edits.
- If non-exempt salaried employees are working overtime, Timeero’s California Overtime settings will allow you to easily classify work hours as overtime or double-time and record employee hours on individual timesheets. This means no more unpaid overtime and a log of adequate proof in the case of wage and hour law claims.
- Timeero’s California Breaks tracker and Daily Sign-off forms allow your employees to effortlessly verify their meal and rest breaks. If some of your employees are non-compliant with the break policy, you will be notified immediately so you can act quickly to address the issue and pay meal premiums on time.
- Besides tracking work hours, Timeero also tracks your employees’ mileage so you can issue quick and accurate reimbursement.
Thanks to GPS technology, there are a variety of ways to track your employees’ locations that are compliant with California GPS tracking laws.
Check out our Timeero review to explore how Timeero’s innovative features can benefit your business.
