New Guidance on “Exempt” Status and Sick Leave Pay Rates

On August 4, 2025, the California Court of Appeal, in Hirdman v. Charter Communications, held that outside salespeople qualify as “exempt” under the Labor Code, meaning employers may calculate their paid sick leave at the same rate used for vacation or paid time off.

The court rejected the Labor Commissioner’s narrower view that only executive, administrative, and professional employees were “exempt,” emphasizing that “exempt” is a statutory term of art covering all overtime-exempt categories.

This published decision provides employers a clearer, more practical method of determining sick-leave pay rates for overtime-exempt employees, reducing compliance uncertainty under California’s paid sick leave law.