What does "exempt" mean? Generally, it means that the employee is exempt from the overtime and rest/meal period provisions of California law. Nonexempt employees generally must be paid at least minimum wage, on an hourly basis, with overtime pay, and must be provided meal and rest periods within set times. Failure to do any of these things will result in penalties/premium pay being owed. Exempt employees are generally (but not always) paid on a salary basis that does not vary depending on hours worked.