Explaining Wage Order Exemptions in California

California state laws require that all non-exempt employees be compensated at time-and-a-half for all hours worked over 8 hours per day and 40 hours in a week. See California Labor Code section 510(a) and Industrial Welfare Commission (“IWC”) Wage Order, Order No. 7-2001 section 3(A). The law also requires employers to maintain accurate time records for all of the hours worked by its employees, provide accurate itemized wage statements, authorize, permit and provide meal and rest periods, and pay all wages earned to an employee immediately upon their termination.

The IWC wage orders specify three exemptions for (1) executive, (2) administrative, and (3) professional employees. The exemptions are strictly defined and narrowly construed, and the employer bears the burden of proving the applicability of an exemption as an affirmative defense. Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, 794.

According the applicable regulations interpreting the Wage Order, in order to qualify for the exemption, an employee must have spent more than fifty percent of their time performing exempt (that is, supervisory or managerial) tasks which require the exercise of discretion and independent judgment.

Under California law, if a manager was performing exempt tasks concurrently with non-exempt tasks, the work must either be classified as exempt or non-exempt work — not both, based on the purpose of the activity serves at the facility. Heyen v. Safeway (2013) 216 Cal.App.4^th 795. For example, even if an employee was performing managerial tasks such as observing subordinates and coaching while helping customers on the floor of the store, the entirety of the time spent on the floor must be classified as non-exempt because the general purpose of the work is customer sales.