Effective January 1, 2008, the minimum hourly rate for exempt computer software professionals will be $36, down from this year's minimum of $49.77. On an annualized basis (based on a 40-hour workweek), the new minimum salary will be $74,880 (down from $103,521.60).

However, employers should be cautious not to fall prey to a common misapplication of this exemption arising from a 2006 amendment to the Labor Code. To qualify as an exempt computer software professional, in addition to satisfying the duties test, the computer worker must receive the minimum rate for each hour worked, even if he or she is compensated on a salary basis. For example, a computer worker who receives a set annual salary of $85,000 but works a 50-hour week would not qualify for the exemption for that week, as the worker's hourly rate for the week would be $32.69, below the $36/hour minimum for 2008. Thus, employers must be careful to take into account the computer worker's entire work schedule when assessing qualification for the exemption.

The soon-to-be-effective rate reduction provides employers an excellent opportunity to reassess their current practices to confirm compliance with this exemption.