First Wednesday — A
Monthly Discussion of Employment Law Issues and Other Hot Topics for Management
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By Jeffrey A. Snyder - Issue No. 66: October 1,
2008 Jeff is a Shareholder of
Thoits, Love, Hershberger & McLean, specializing in
employment law and related litigation.
He can be reached at
(650) 327-4200 or |
California
Amends Overtime Exemption ― Simplifies the Employer’s
Burden to Pay Salaried Computer Professionals
Governor Schwarzenegger recently signed urgency
legislation amending the overtime exemption that applies to certain computer
professionals working in
The Computer
Professional Exemption
First, consider the computer professional exemption
in the context of the general rules regarding payment of overtime. Typically, anyone working more than 8 hours
in one day, or more than 40 hours in one workweek, must be paid time-and-one-half
for the extra hours, unless the employee is exempt from overtime
requirements. In a disputed matter, the
employer bears the burden of proving that an employee is exempt. There is a minimum salary requirement and a
separate duties test. AB 10 deals with
the salary issue and does not change the “duties” test for computer
professionals.
Changes Due to the
Passage of AB 10
Under existing law, employers had to pay computer
professionals at least $36 for each hour worked to qualify for the exemption. Thus, employers had to keep track of the
employee’s actual hours worked by each computer professional. For example, if the employer and employee
agreed to an annual salary of $108,000 (a robust 3,000 hours worked x
$36/hour), and the computer professional actually worked 3,010 hours, the
employer would owe wages for at least 10 extra hours, and possibly additional
penalties and interest.
Now, with the amendment to the Labor Code, the need
for onerous timekeeping is eliminated. A
straight salary can be paid without regard to hours actually worked. This makes the computer professional
exemption consistent with other overtime exemptions (most typically, the
professional, administrative and executive exemptions) that allow employers to
pay exempt employees on a straight salary basis without worrying about how long
it takes the employee to get the job done.
Note that under the new law, exempt computer
professionals can be paid by the hour or on a salary basis. They can still be paid at $36 per hour, but
if the employee is working at or near a full-time schedule, the employer should
pay a salary ($75,000 or more) to avoid the hours-tracking problem discussed
above. For part-timers, an hourly rate
of at least $36 should be used.
The minimum hourly rate and minimum salary will be
adjusted annually for inflation according to the consumer price index
(“CPI”). The CPI is expected to be
released today, October 1, 2008, so these amounts will likely increase ―
but any increase will not be effective until January 1, 2009. (Employers can check the new hourly rate and
salary requirements at: www.dir.ca.gov/dlsr/cpi/otcpi.pdf.)
The “Duties” Test
Still Applies
In addition to meeting the minimum salary or hourly
rate requirement, for the computer professional to be overtime exempt, he or
she must continue to meet the “duties” test, as follows:
(1) The employee is primarily engaged in work
that is intellectual or creative and that requires the exercise of discretion
and independent judgment.
(2) The employee is primarily engaged in
duties that consist of one or more of the following:
(A) The application of systems analysis
techniques and procedures, including consulting with users, to determine
hardware, software, or system functional specifications.
(B) 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.
(C) The documentation, testing, creation, or
modification of computer programs related to the design of software or hardware
for computer operating systems.
(3) 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.
Labor Code Section 515.5 goes on to list certain
exceptions to the exemption, including trainees, technical writers, repair and
maintenance personnel and certain others who do not work independently. The statute is very detailed, so it should be
reviewed carefully with labor counsel or a human resources specialist if there
is any question about the applicability of this exemption.
In essence, for the exemption to apply, the job
duties of the computer professional must be intellectual or creative, and
require the exercise of discretion and independent judgment, similar to other
exemptions with which most employers are familiar.
Suggested
Action
Now that
For computer professionals working outside of
(© 2008 Thoits, Love, Hershberger & McLean)
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