California Amends its Computer Professional Exemption
California recently amended its overtime laws to clarify the "computer professional exemption." The amendments provide greater clarity and certainty to employers with operations in California.
Previously, employees were exempt from overtime under the "computer software professional" exemption if they earned at least $36.00 per hour (or the annualized full-time salary equivalent of such rate) and:
- They were primarily engaged in intellectual or creative work requiring the exercise of discretion and independent judgment; and
- They were primarily engaged in duties consisting of one or more of the following:
- The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or systems functional specifications; or
- The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; or
- The documentation, testing, creation or modification of computer programs related to the design of software or hardware for computer operating systems; and
- They were highly skilled and proficient in the theoretical and practical application of highly specialized information to (i) computer systems analysis; (ii) programming; and (ii) software engineering.
The amendments clarified two key provisions. First, the exemption now applies to employees earning a minimum of $75,000 per year. Second, in the third bullet above, the conjunctive "and" was replaced with the disjunctive "or," meaning that the exemption applies if the employer can establish that the employee is "highly skilled" in either computer systems analysis, programming or software engineering. In other words, employers no longer need to establish that the employee is "highly skilled" in all three areas.
These new provisions are effective immediately. Note that in addition to paying time and one half to all non-exempt employees working over 40 hours in a given week, California requires (1) payment of time and one half to all non-exempt employees working (a) over 40 hours in a given week; (b) over 8 hours in a single day; or (c) the first 8 hours on the 7th consecutive work day; and (2) double pay to all non-exempt employees working (i) more than 12 hours in a single day and (ii) over 8 hours on the 7th consecutive work day.
Also note that the California law does nothing to change the computer professional exemption under the federal Fair Labor Standards Act (FLSA). The FLSA exemption applies if the employee earns at least $455 per week or is paid at least $27.63 per hour and his/her primary duty consists of (1) the application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; (2) the design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; (3) the design, documentation, testing, creation or modification of computer programs related to machine operating systems; or (4) a combination of the aforementioned duties, the performance of which requires the same level of skills.
