CSLB Law & Business ExamEmployment RequirementsHard
A construction company classifies its jobsite supervisor as exempt under the executive exemption and pays her a fixed salary of $5,200 per month. California's minimum wage is $16.00 per hour. Does her salary meet the minimum salary threshold required for the executive exemption?
- ANo, because exempt employees in California must be paid hourly, not salaried
- BYes, because any fixed monthly salary satisfies the exemption test
- CYes, because it exceeds the federal minimum salary threshold
- DNo, because the required monthly minimum is approximately $5,546.67 (twice minimum wage for full-time work)
Show answer & explanationAnswer & explanation
Correct answer: D. No, because the required monthly minimum is approximately $5,546.67 (twice minimum wage for full-time work)
California's exempt salary basis test requires exempt employees to earn a monthly salary equal to at least two times the state minimum wage for full-time (40 hour) employment: 2 x $16.00 x 40 x 52 / 12 = $5,546.67 per month. Since $5,200 is below this threshold, she does not qualify as exempt regardless of her duties.
Why the other options are wrong
- A. Exempt employees are typically paid on a salary basis, not hourly.
- B. The salary must meet a specific calculated minimum, not just any fixed amount.
- C. California's standard is higher than the federal threshold and controls here.
Exempt Salary Basis Test
California requires exempt executive, administrative, and professional employees to be paid a monthly salary of at least twice the state minimum wage for full-time employment.
- Formula: 2 x minimum wage x 40 hours x 52 weeks / 12 months
- At $16.00/hr minimum wage, threshold is $5,546.67/month
- Failing this test means the employee is non-exempt regardless of duties
Memory trick: Double the minimum wage, or the exemption falls apart.