The computer professional exemption, found in Section 515.5 of the Labor Code, exempts highly-skilled systems analysis, programmers, software engineers and similar employees who earn at least $36.00 per hour "or the annualized full-time salary equivalent of that rate".  Unfortunately, the lawmakers did not specify how one would go about calculating the requisite annualized salary.

 

The new law establishes an annualized salary threshold of $75,000, which must be paid in increments of at least $6,250 per month.  If this amount is paid, the employee will qualify for the overtime exemption even if their actual hourly rate turns out to be less than $36.00 per hour.

 

Under the federal Fair Labor Standards Act ("FLSA"), a systems analyst or programmer earning as little as $455 per week ($23,660 annually) may qualify for the overtime exemption.  Though federal standards are easier to meet, employers in California cannot follow them for California based employees.

 

In addition to meeting the salary threshold, the California exemption also has a "duties" test.  The exemption is limited to those employees who spend more than half of their work time engaged in the "exempt" systems analysis or programming work and the work must require the employee to make independent, discretionary decisions.  If the employee's duties do not qualify for the exemption, then the exemption is unavailable.

 

The new law simplifies the salary calculation and will be welcome news to employers who have employees that meet the requisite pay and duties requirements.

 

Please call you contact at the Firm if you have any questions about how this amendment may affect employees in your company or if you have any questions in general regarding the application of the computer software exemption to your employees.