Can I classify an employee who works only part-time as exempt?
An employee’s exempt classification must be evaluated by the employee’s rate of pay and the duties he/she performs, not necessarily by the number of hours worked.
An employee who meets the salary test requirements and is primarily engaged in exempt duties may be properly classified as exempt.
Salary Test Requirements
Under California Labor Code Section 515, most “white collar” exempt employees must “earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.”
For purposes of the minimum exempt salary level only, the code states that full-time employment is 40 hours per week. (Note that employers are free to set their own definition of full-time work for other purposes, such as entitlement to vacation accrual and holiday pay.)
Based on the current two-tier California minimum wage, for businesses with 25 or fewer employees, the annual exempt salary minimum is $45,760 ($3,813.33 per month), and for larger employers, the minimum is $49,920 ($4,160 per month).
Labor Code Section 515 does not require that an employee work full-time hours in order to be exempt. However, regardless of the number of hours actually worked, the salary minimum stays the same and may not be prorated for work that is less than 40 hours per week.
A full-time exempt employee earning $50,000 per year who cuts back to 20 hours per week and has his/her salary prorated to $25,000 would not meet the minimum salary test and thus could not remain exempt.
There are a few exceptions to this minimum salary requirement for outside sales, computer professionals and certain doctors.
Duties Test Requirements
Regardless of whether an employee works full-time or part-time, the employee must be “primarily engaged” in exempt duties, meaning he/she must spend more than 50 percent of his/her time engaged in those duties.
As an example, a licensed architect who wants to work only part-time hours can be classified as exempt as long as he/she primarily engages in architectural work and receives at least the full minimum required salary.
On the other hand, an exempt manager cutting back to part-time may not end up “primarily engaged” in managerial duties in the part-time role, because someone else in the company may need to take over more day-to-day management of workers. This would mean the manager may no longer meet the managerial duties test and therefore might not remain exempt.