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The California Executive Exemption
The Executive Exemption is provided for by the FLSA (Federal Labor Standards Act) and is not exclusive to the State of California. Under this exemption, an employee is exempt from overtime pay if he or she meets certain requirements enumerated here. In addition to the qualification requirements outlined below, to be considered an “executive” in the state of California, he or she must be paid a salary of at least $640/week or $33,280 annually. This minimum exempt salary is based on two times the current California minimum wage, which currently stands at $8.00 per hour.
An individual employed in an executive capacity, and exempt from overtime pay, means the following:
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Responsibilities and duties involve the management of the enterprise in which he or she is employed or of a customarily recognized department or subdivision. |
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Regularly and customarily directs the work of two or more employees. |
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Authority to hire or fire other employees or whose recommendations as to the hiring and firing and as to the promotion or advancement or any other change of status of other employees will be given particular weight. |
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Primarily engages in duties which meet the test of the exemption |
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Regularly and customarily exercises discretion and independent judgment |
To further clarify the supervision requirement of two more employees discussed above, the Industrial Welfare Commission (IWC) Orders indicate that this may be one full-time and two half-time employees. However, it has been the experience of the DLSE that a managerial employee supervising as few as two employees rarely spends as much as 50% of his or her time primarily engaged in managerial duties.
The California Executive Exemption is an area of frequent abuse by California employers. An important fact to keep in mind is that to be properly classified as exempt under the California executive exemption, an employee must meet all of the criteria outlined above. If even one of the requirements is not met, then the individual is not exempt from overtime pay.
If you feel you may have been improperly classified as executive exempt by your employer, or you have other overtime or labor law violations to discuss, contact our employment attorneys for a free claim evaluation.
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