California Administrative Exemption (2023)

Employers must pay their employees California overtime and California minimum wage, unless an employee is “exempt” under California’s employee exemptions. One of these exemptions is the California administrative exemption. Unfortunately, the administrative exemption is one of the most misunderstood and misapplied.

In addition to the federal , many states – including California – have their own laws and requirements for employees to be considered exempt.

What is California’s administrative exemption?

Generally speaking the administrative exemption typically applies to employees who spends the majority of their work time:

• doing office or non-manual work directly related to management policies or general business operations of the employer or the employer’s customers, and
• exercising discretion and independent judgment.

Administrative exempt employees must also earn a salary of more than $64,480 a year, as of 2023.

Commonly misclassified employees under the California administrative exemption

Employees commonly misclassified as exempt under California’s administrative exemption may include:

• Retail store managers
• Assistant store managers
• Mortgage loan originators
• Insurance claims adjusters
• Pharmaceutical sales representatives
• Manufacturer’s representatives that do marketing and merchandising at retail stores

There is also a similar federal administrative exemption under federal wage & hour law.