California’s Labor Code contains some of the most, if not the most, employee-friendly laws in the United States; and much of the code is spent dealing with the minimum wages employees must be paid, and the maximum hours they can be made to work without requiring additional compensation. However, not all minimum wage/overtime laws are created equal, and in California, some computer professionals are governed by a specific minimum wage requirement.
California Labor Code §515.5 eliminates overtime wages for computer professionals if they are paid in accordance with the California Labor Code §510 . The current wage requirements for computer professionals to be considered exempt from overtime pay will be increased effective January 1, 2015 and are as follows:
- $85,981.40 annually working full time (up from $84,130.53), or
- $7,165.12 per month (up from $7,010.88), or
- $41.27 (up from $40.38) per hour
In addition to the minimum salary, the computer professionals must also meet the other requirements in order for the computer professional exemption to apply. According to the California Labor Code, a computer professional is now exempt from overtime wages if the employee is ALL of the following:
- primarily engaged in work that is intellectual or creative and requires the exercise of independent judgment;
- The employee is primarily engaged in duties that consist of one or more of the following:
- The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications.
- 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.
- The documentation, testing, creation, or modification of computer programs related to the design of software or hardware for computer operating systems.
- 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. A job title shall not be determinative of the applicability of this exemption; and
- The employee is paid the minimum wages provided above.
The employee must also be paid his or her full salary for any week in which he or she performs any work and the compensation must be paid at a predetermined amount on a weekly, bi- weekly, or semi-monthly basis. In certain specific situations salary paid on a monthly basis may meet this criteria.
Conflict with H-1B Wage Requirements and Job Titles
As discussed above, in order for an employee to qualify for the computer professional exemption, employees must be paid the minimum salary, and meet the duties test. The wage and duty requirements are wholly separate from the job title and prevailing wage requirements imposed by USCIS for H-1B visa applicants.
If an employer wants the computer professional exemption to apply to an H-1B employee working in California, their salary must be at least meet the minimum under Labor Code §515.5. For example, if the prevailing wage is $60,000; and the individual is being paid $65,000, they certainly meet the prevailing wage, but are notexempt computer professionals. Additionally, the job title on the LCA does not determine the application of the exemption; the duties the individual is actually performing must meet the requirements under the code.
We advise employers to seek legal counsel to analyze their payroll procedures and applicable job descriptions to ensure that their California computer professional employees are properly classified as exempt for overtime purposes.