The U.S. Department of Labor has a web site that should give you information on your question. Check http://www.dol.gov/whd/flsa/ for information about wage and hour laws. I think you have a situation where you should consult with an experienced local attorney to see what your options are.
I have taken no action on your problem other than to review your question. I want to confirm that no attorney-client relationship has been created between our firm and you in connection with this matter, and that nothing in this response is legal advice to you.
As you may know, the legislature and the courts can change the law in ways that may affect the strength of your case. In addition, the circumstances of your case may change. Because we do not represent you, we cannot keep track of, and inform you about, any change in the law.
I must warn you that there are time limits for raising certain claims and defenses. Without taking more time to review your case, this firm cannot properly advise about those deadlines. You may lose your claims and defenses if they are not filed in court within the time allowed. I would advise you to retain the services of an attorney as soon as possible.
The answer to your question is that it depends. California Labor Laws set forth specific overtime exemptions. What kind of work does your wife do? Is she a professional? Does she have managerial responsibilities? A lawyer would need to know the answer to all of these questions and then some in order to provide you with an accurate answer. This link might also be helpful:
As the other attorneys have mentioned, you should consult with an attorney experienced in California wage and hour laws. Depending on a number of factors, your wife may in fact be entitled to overtime, among other rights.