On September 30, 2008, Governor Schwarzenegger signed into law a bill clarifying that salaried computer software professional employees who earn at least $75,000 a year are exempt from overtime compensation requirements.
The new law clarifies an ambiguity in the overtime pay exemption for professionals in the computer software field in California. The previous law exempted employees paid at least $36 an hour, "or the annualized full-time salary equivalent of that rate." This statutory language caused an ambiguity in calculation of the "annualized equivalent," and resulted in employers having to track overtime hours for their highly paid salaried computer professionals. Under the new law, hourly employees earning at least $36 an hour and salaried employees earning at least $75,000 a year are exempted from overtime compensation requirements, thus defining clear amounts for both hourly and salaried employees. This new requirement takes immediate effect.
The new law does not change the other criteria for exemption from overtime pay for computer software professionals. This exemption continues to apply only to employees who are primarily engaged in intellectual or creative work that requires the exercise of discretion and independent judgment. It applies to individuals performing the duties of systems analysts, programmers, and software or hardware engineers. Job titles, however, are not determinative of the applicability of the exemption created by this law.