California Exempt Salary Requirements by Employer Size

In 2022, California’s exempt salary requirements split by employer size: businesses with 26 or more employees had to pay exempt workers at least $62,400 per year, while businesses with 25 or fewer had to pay at least $58,240. Anyone falling below those figures by even a dollar was non-exempt by default and owed overtime for qualifying hours, regardless of job title.

The Two 2022 Thresholds and Why Size Mattered

California Labor Code Section 515 sets the exempt salary floor at twice the state minimum wage for full-time (40-hour) work.¹ In 2022, the state still ran two minimum wage tiers based on headcount, which produced two separate exempt salary thresholds.

Employers with 26 or more employees were on a $15.00 minimum wage.² Doubling that and multiplying by 2,080 annual hours ($15.00 × 2 × 2,080) produced an exempt salary floor of $62,400 per year, or $1,200 per week.

Employers with 25 or fewer operated under a $14.00 minimum wage. The same math ($14.00 × 2 × 2,080) set their exempt floor at $58,240 per year, or $1,120 per week.¹ California unified its minimum wage in 2023, so the size split only matters now for claims and audits reaching back into 2022 or earlier. For those, the employer’s 2022 headcount determines which threshold applies.

Salary Alone Did Not Make Someone Exempt

Hitting the salary number was necessary but not enough. California requires exempt employees to spend more than half their working time on duties that genuinely qualify as exempt. The statute defines “primarily” as “more than one-half of the employee’s worktime,” which is stricter than the federal “primary duty” test.¹ Most successful misclassification claims in the state turn on this point. The salary was right, but the employee actually spent the majority of their time on data entry, customer service, or other non-exempt tasks.

Every exempt employee also has to regularly exercise discretion and independent judgment. That means real decisions with real consequences, not checklist work.

Executive Exemption

An executive exempt employee manages the business or a recognized department, regularly directs the work of at least two other employees, and has authority to hire, fire, or meaningfully influence those decisions.³ “Two employees” means two actual people in the same department, not full-time equivalents. A shift lead who assigns tasks but has no voice in hiring usually fails this test.

Administrative Exemption

The administrative exemption covers office or non-manual work directly tied to management policies or general business operations, performed while assisting an owner or executive.³ This is the most litigated of the three because the line between administrative work and production work can be blurry. An HR manager writing company policy fits. A claims adjuster working through a standard review checklist usually does not.

Professional Exemption

Professional exemptions apply to employees licensed or certified by California to practice law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting.³ The category also covers learned and artistic professions where the work is primarily intellectual and varied, requiring advanced knowledge or genuine creative ability rather than long experience on the job.

The Salary Basis Rule

Exempt employees have to receive a fixed, predetermined salary every pay period regardless of hours worked or output produced. If the employee does any work during a workday, they are owed their full day’s pay.

Partial-day deductions are not allowed. An exempt worker who leaves three hours early for a doctor’s appointment still gets the full day. Deductions are only permissible in narrow cases: full-day absences for personal reasons unrelated to sickness, or full-day absences for illness when the employer has a legitimate paid-leave plan covering the lost time. FMLA intermittent leave creates one additional exception, since federal rules allow partial-day deductions in that specific scenario.

Breaking the salary basis rule can reach beyond the single employee affected. Routinely docking exempt workers for short Fridays or early departures can destroy the exemption for the entire class of similarly situated employees, converting a payroll habit into company-wide overtime liability.

Separate Rates for Computer Software Professionals and Physicians

California maintains higher, separately indexed thresholds for computer software employees and licensed physicians. These rates are adjusted every January 1 based on the California Consumer Price Index for Urban Wage Earners and Clerical Workers, so they do not follow the twice-minimum-wage formula and do not vary by employer size.

For 2022, a computer software employee had to meet one of these minimums:

Hourly rate: $50.00
Monthly salary: $8,679.16
Annual salary: $104,149.81

The exemption only applies to intellectual or creative work in systems analysis, programming, software engineering, or similar fields. Help desk staff, hardware technicians, and trainees still learning the craft are not covered.⁴ The statute explicitly says a job title like “software engineer” is not determinative on its own.

Licensed physicians and surgeons had to earn at least $91.07 per hour in 2022 to remain exempt. The threshold applies only to work requiring a medical license and does not cover medical residents, interns, or physicians covered by a collective bargaining agreement.⁵

If You Were Misclassified in 2022

California allows three years to file a claim with the Labor Commissioner’s office for unpaid minimum wages, unpaid overtime, or illegal deductions.⁶ Claims based on a written employment contract get four years. Overtime from early 2022 is already close to the three-year cutoff, so timing matters.

A successful claim recovers more than the unpaid wages. California entitles employees to liquidated damages equal to the unpaid wage amount, plus interest, which effectively doubles the recovery. If the employer also failed to pay final wages promptly after a separation, waiting time penalties can add up to 30 days of additional wages at the employee’s daily rate.⁷

What Employers Face for Getting It Wrong

The penalty structure is layered. Standard overtime violations draw a civil penalty of $50 per underpaid employee per pay period for an initial violation and $100 per employee per pay period for subsequent violations, on top of the full back wages owed.⁸ For a biweekly employee over a full year, that initial penalty alone reaches $1,300 per worker before any back wages are counted.

Willful misclassification is a different magnitude. Under Labor Code Section 226.8, each violation carries a civil penalty between $5,000 and $15,000, rising to $10,000 to $25,000 per violation where the state finds a pattern or practice.⁹ These sit on top of back wages, liquidated damages, and interest owed to the employees themselves. For a company that misclassified a ten-person department throughout 2022, combined exposure can reach six figures before attorney fees.

1
California Legislative Information. California Code LAB 515 – Exemptions from Overtime
2
California Department of Industrial Relations. California Minimum Wage to Increase to $15.50 per Hour
3
Department of Industrial Relations. IWC Wage Order 5-2001 – Public Housekeeping Industry
4
California Legislative Information. California Labor Code 515.5 – Computer Software Employee Exemption
5
California Legislative Information. California Labor Code 515.6 – Physician and Surgeon Exemption
6
Department of Industrial Relations. Recover Your Unpaid Wages with the Labor Commissioner’s Office
7
California Legislative Information. California Labor Code LAB 203 – Waiting Time Penalties
8
California Legislative Information. California Code LAB 558 – Civil Penalties for Overtime Violations
9
California Legislative Information. California Labor Code LAB 226.8 – Willful Misclassification