Does paying a salary make an employee exempt in California?
No. Paying a salary does not by itself make someone exempt from overtime in California. The employee must also perform exempt duties and earn at least twice the state minimum wage for full-time work — $70,304 a year as of January 1, 2026. Miss either test and overtime is owed.
Exemption is a two-part test, and both parts must be satisfied. The salary test is arithmetic: two times the state minimum wage ($16.90 in 2026) for 2,080 hours a year, which comes to $70,304. The duties test asks what the person actually does day to day, not what the job title says.
This is one of the most expensive misclassifications in California, because unpaid overtime for a misclassified employee accrues quietly and is typically claimed years later, together with penalties.
Note that the salary floor moves whenever the state minimum wage does — a salary that qualified last year may not qualify this year.
Sources
Last reviewed 2026-08-07. Informational only — not legal advice. California rules change; confirm against the current source before acting.
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