Non-Exempt Employee

What Is a Non-Exempt Employee?

A non-exempt employee is a worker who is entitled to the full range of California wage and hour protections, including overtime pay, meal breaks, rest breaks, and accurate wage statements. The term "non-exempt" means these employees are NOT exempt from the protections of California's Labor Code and Industrial Welfare Commission (IWC) Wage Orders.

Non-exempt classification is the default in California—all employees are presumed non-exempt unless the employer can demonstrate they meet ALL requirements for an exemption. This employee-protective approach reflects California's strong labor law framework.

California Non-Exempt Employee Protections

Non-exempt employees receive comprehensive wage and hour protections:

Overtime Compensation

Overtime Type	Rate	Trigger
Daily overtime	1.5× regular rate	Hours over 8 in a workday
Double time	2× regular rate	Hours over 12 in a workday
Weekly overtime	1.5× regular rate	Hours over 40 in a workweek
7th consecutive day (first 8 hours)	1.5× regular rate	Working all 7 days of workweek
7th consecutive day (over 8 hours)	2× regular rate	Hours over 8 on 7th day

Meal Break Requirements

Shift Length	Meal Break Requirement
5+ hours	First 30-minute unpaid meal break
10+ hours	Second 30-minute unpaid meal break
Over 12 hours	Second meal break can be waived by mutual consent if first was taken

Key rules:

Meal breaks must be provided no later than end of 5th hour (first) and 10th hour (second)
Employee must be relieved of all duties
Employee must be free to leave the premises
Penalty: 1 hour of pay for each day a compliant meal break is not provided

Rest Break Requirements

Hours Worked	Rest Breaks Required
3.5 - 6 hours	1 ten-minute break
6 - 10 hours	2 ten-minute breaks
10 - 14 hours	3 ten-minute breaks

Key rules:

Rest breaks are paid time
Should be in the middle of each 4-hour work period when practicable
Employee must be relieved of all duties
Penalty: 1 hour of pay for each workday a rest break is not provided

Additional Protections

Protection	Requirement
Minimum wage	State and local minimum wage compliance
Reporting time pay	Pay for showing up even if sent home early
Split shift premium	Extra pay for shifts with long gaps
Wage statement	Detailed itemized pay stub each pay period
Timely payment	Pay on regular schedule, final pay within required timeframes
Record keeping	Employer must maintain time records

Determining Non-Exempt Status

The Default Rule

California law presumes all employees are non-exempt. The employer bears the burden of proving an exemption applies.

Non-Exempt Indicators

An employee is likely non-exempt if ANY of the following apply:

Factor	Indicates Non-Exempt Status
Hourly pay	Paid by the hour rather than salary
Below salary threshold	Annual salary below 2× minimum wage ($68,640 in 2025)
Time tracking	Required to record hours worked
Production work	Spends majority of time on production rather than management
Limited authority	Doesn't hire, fire, or direct other employees
Close supervision	Work is closely supervised by others
Manual labor	Significant physical or manual work component
Routine tasks	Follows established procedures with little discretion

Job Categories Typically Non-Exempt

Industry	Typically Non-Exempt Positions
Retail	Sales associates, cashiers, stock clerks
Restaurant	Servers, cooks, hosts, bussers, dishwashers
Healthcare	CNAs, medical assistants, technicians
Manufacturing	Production workers, assembly line, machine operators
Construction	Laborers, apprentices, most tradespeople
Office	Administrative assistants, receptionists, data entry
Hospitality	Front desk clerks, housekeepers, valets
Transportation	Drivers, delivery personnel, warehouse workers

Non-Exempt Payment Methods

Non-exempt employees can be paid in various ways—all require overtime and break compliance:

Hourly Rate

Most common method:

Set hourly rate for regular hours
Overtime calculated at 1.5× or 2× rate
Easiest to track and calculate

Salary (Non-Exempt)

Non-exempt employees CAN be paid salary:

Must still track hours
Must still pay overtime for hours over 8/day or 40/week
Salary divided by hours to determine regular rate
All break requirements still apply

Piece Rate

Payment per unit produced:

Must separately compensate for rest breaks and non-productive time
Overtime still required
Average rate must meet minimum wage
See piece rate for detailed requirements

Commission

Payment based on sales:

Overtime still required
Regular rate calculated by including commissions
Complex calculations—see commission pay rules

Calculating Non-Exempt Employee Pay

Regular Rate of Pay

The regular rate of pay is critical for calculating overtime. It includes:

Included in Regular Rate	Not Included
Base hourly/salary rate	Gifts and bonuses at employer discretion
Shift differentials	Expense reimbursements
Non-discretionary bonuses	Premium pay for overtime already worked
Production bonuses	Profit-sharing plans
Commissions	Stock options

Example: Weekly Pay Calculation

Employee earns $20/hour and works the following:

Day	Hours	Regular	OT (1.5×)	DT (2×)
Monday	10	8	2	0
Tuesday	9	8	1	0
Wednesday	8	8	0	0
Thursday	13	8	4	1
Friday	6	6	0	0
Total	46	38	7	1

Calculation:

Regular pay: 38 hours × $20 = $760
Overtime (1.5×): 7 hours × $30 = $210
Double time (2×): 1 hour × $40 = $40
Total gross pay: $1,010

Note: Daily overtime is counted first, then weekly overtime applies to remaining hours over 40.

Employer Obligations for Non-Exempt Employees

Time Tracking

Employers must maintain accurate records including:

Record	Retention Period
Time worked each day	3 years
Meal break records	3 years
Total wages paid	3 years
Pay rate and basis	3 years

Scheduling Requirements

Employers must:

Provide meal breaks: Cannot impede, discourage, or prevent meal breaks
Authorize rest breaks: Must authorize and permit rest breaks
Track overtime: Monitor hours approaching overtime thresholds
Pay all hours: Compensate for all time "suffered or permitted" to work

Wage Statement Requirements

Each wage statement must include:

Gross wages earned
Total hours worked (non-exempt)
Number of piece-rate units (if applicable)
All deductions
Net wages
Pay period dates
Employee name and ID
Employer name and address
All applicable hourly rates and hours at each rate

Common Non-Exempt Compliance Issues

Issue 1: Off-the-Clock Work

Problem: Employees working before/after shift or during unpaid breaks

Examples:

Pre-shift setup or computer booting
Post-shift cleanup or closing duties
Working through lunch breaks
Checking emails from home

Solution: Pay for all time worked; establish clear policies prohibiting off-the-clock work

Issue 2: Automatic Meal Break Deductions

Problem: Automatically deducting 30 minutes even when breaks are missed or short

Solution: Require employees to record actual break times; review records for compliance

Issue 3: Rounding Abuse

Problem: Time rounding that systematically favors employer

Solution: Ensure rounding is neutral over time and follows proper rounding rules

Issue 4: Working Through Rest Breaks

Problem: Employees not taking rest breaks or being interrupted

Solution: Relieve employees of all duties; provide coverage; enforce break taking

Issue 5: Misclassified as Independent Contractor

Problem: Treating employees as independent contractors to avoid wage and hour laws

Solution: Apply ABC test to all worker relationships