Employers of California computer professionals must ensure compensation rates meet new salary thresholds that go into effect January 1, 2017.

In addition to reviewing compensation to ensure compliance with upcoming salary threshold changes issued by the US Department of Labor’s (DOL’s) Final Rule related to white collar overtime exemptions under the Fair Labor Standards Act (FLSA),[1] California employers that rely on the state’s computer professional exemption should review compensation of their computer professional employees and make appropriate adjustments by January 1, 2017.

To qualify for the California computer professional exemption, employees must meet certain salary and job duties set forth under Labor Code Section 515.5. The compensation rates are adjusted annually for inflation according to the California Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers.[2] Effective January 1, 2017, to qualify for the exemption, employers must pay their California computer professional employee a salary of at least $88,318.55 annually ($7,359.88 monthly) or an hourly wage of $42.39.[3] This reflects an increase of 1.3% above 2016 rates.[4]

California Computer Professional Duties Test Remains Unchanged

In addition to the increased salary requirement, a California computer professional must also still satisfy the duties test set forth under Labor Code Section 515.5. The California computer professional employee’s primary[5] responsibilities[6] must include at least one 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 California computer professional must also be highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, or software engineering. Moreover, the duties test generally requires the computer professional to be primarily involved in work that is intellectual or creative, and that requires the exercise of discretion and independent judgment. The Labor Code also specifies certain duties that do not qualify.

New Federal White Collar Salary Increases Will Not Impact California’s Computer Profession Requirements

As a reminder, the increased salary requirements for FLSA white collar exemptions go into effect on December 1, 2016. FLSA Section 13(a)(1) addresses overtime exemptions under federal law for certain employees in computer-related occupations. However, given California’s higher salary requirement for computer professionals, the DOL’s Final Rule will not directly impact California’s computer professional exemption. As to white collar exempt positions, the new federal salary requirement will exceed California’s salary threshold until January 1, 2019, at which time the state’s salary requirement will again exceed the federal threshold.