• Recent California Developments: The Computer Professional Exemption Is Amended
  • October 22, 2008 | Authors: Jacqueline Cookerly Aguilera; Debra L. Fischer; James Severson; Wendy M. Lazerson; Douglas T. Schwarz; Mie Fujimoto
  • Law Firms: Bingham McCutchen LLP - Los Angeles Office; Bingham McCutchen LLP - San Francisco Office; Bingham McCutchen LLP - East Palo Alto Office; Bingham McCutchen LLP - New York Office; Bingham McCutchen LLP - Tokyo Office; Bingham McCutchen LLP - Boston Office
  • Employers will no longer need to track the hours of certain computer professionals due to urgency legislation approved by Governor Schwarzenegger on September 30, 2008, enacting immediate changes to California's computer software employee exemption. Governor Schwarzenegger recently signed into law Assembly Bill 10, which amends California’s computer professional exemption in Labor Code § 515.5. This bill was a “trailer bill” to the final budget passed by the Governor.

    Under the previous version of California Labor Code § 515.5, a computer professional was exempt from overtime if he or she met the duties requirements set forth in the statute and earned an hourly rate of $36 per hour, “or the annualized full-time equivalent of that rate.” As a practical matter, this meant employers had to keep records of actual hours worked in order to determine if overtime compensation was due.

    The bill amends Labor Code § 515.5 to no longer require hourly tracking by establishing a minimum annual salary level. Under the new law, computer professionals are exempt from overtime pay if they earn $36.00 per hour, or an annual salary of $75,000 or more. Computer professionals paid on a salary basis must be paid at least once per month, and in a monthly amount of not less than $6,250. The salary level and hourly rate are tied to the California Consumer Price Index and will be adjusted annually.

    In addition, the new law changes the duties test to require an exempt computer professional to be highly skilled and proficient in the theoretical and practical application of only one of the following three disciplines: (1) computer systems analysis, (2) programming “or” (3) software engineering – not all three.

    Finally, the new law clarifies that an employee who is skilled in computer-aided design software, but who is not engaged in systems analysis, programming, or any other similarly skilled computer related occupation, does not qualify for the computer professional exemption.

    Significance For Employers

    In light of the recent changes to California’s computer professional exemption, employers no longer need to keep track of the hours worked by computer professionals who satisfy the new salary requirements. Employers should also assess whether the duties performed by computer-related professionals previously considered non-exempt, are now covered under the amended exemption.