California only allows computer professionals to be treated as exempt (not subject to overtime laws) if they meet several requirements including being paid a minimum hourly wage or annual salary. After two years with no inflation adjustments, the Department of Labor Standards Enforcement (DLSE) announced an increase for 2012. The increase became effective January 1, 2012 and requires in addition to meeting the other exemption requirements, a minimum hourly wage of $38.89 per hour or $81,026.25 per year.
California Labor Code Section 515.5 provides that computer professionals are exempt from overtime if their employment meets the following criteria:
- The employee is engaged in primarily intellectual or creative work that requires the exercise of discretion and independent judgment (defined at CLC 515.5(a)(2)(A)-(C);
- The employee is highly skilled and is proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, or software engineering; and
- The employee's rate of pay exceeds $81,026.25 per year (or $38.89 per hour).
The new minimum non-exempt wage rate became effective January 1, 2012 and represented a 95-cent increase in the hourly rate for computer professionals, from $37.94 to $38.89 per hour. The monthly rate increased to $164.69, from $6,587.50 to $6,752.19 and the annual salary increased $1,976.25, from $79,050 to $81,026.25.
Download DLSE's Announcement of 2012 Computer Software Employee Minimum Exemption Wages
This means that any computer professional paid less than $81,026.25 per year is not an exempt employee in California and must be paid hourly and compensated for overtime. Additionally, merely paying $81,026.25 per year is not enough. The job and the employee must also meet the other requirements listed.