California employers must ensure that compensation rates for computer professionals meet updated salary thresholds, as of January 1, 2022.
The California Department of Industrial Relations (DIR) issued a memo on October 18, 2021 increasing the compensation threshold for exempt computer professionals by 5.3%, compared to the 2021 rates. The DIR adjusts the compensation rates each year to account for inflation based on the California Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers. Despite the coronavirus pandemic that has now been ongoing for 19 months, the CPI increased 5.3% over the last 12 months. As a result, the compensation rate for the computer professional has also increased.
Starting January 1, 2022, California employers must pay their computer professional employees a salary of at least $104,149.81 annually ($8,679.16 monthly) or an hourly wage of $50.00 every hour worked in order to remain exempt from paying such employees overtime compensation. In addition to the increased pay requirement, California employers must ensure that their computer professionals satisfy the duties test set forth under California Labor Code Section 515.5.
Importantly, the California test for computer professionals differs from the federal regulations. With respect to the federal exemption for employees in computer-related occupations under the Fair Labor Standards Act (FSLA), the US Department of Labor (DOL) lists a salary level threshold of $684 per week ($35,568 per year). Further, an hourly paid computer-related position may be exempt if paid at least $27.63 per hour.
Employers with computer professionals in their workforce across multiple states should consider how they will address pay rates across different states, especially since the 2022 California computer professional exemption salary threshold is very close to the salary threshold of $107,432 for the federal highly compensated employee exemption, which provides another avenue for exempt status outside of California.