My question has to do with computer professionals and overtime. We’re going to be hiring some highly paid computer people in the near future. It looks like they will be making between $40 and $60 an hour. Under California law, do we have to pay them overtime? Is there some cutoff or some duty test? — Paula W., HR Manager in Paloma
Paying Overtime: 10 Key Exemption Concepts
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Shari Dunn and Nicole Lerner tackled this question for us.
To determine exemption status, we must look at the labor standards written for computer professionals. In 2000, in response to the ever-growing era of technology and the Internet, California created an overtime exemption law specific to computer professionals under Labor Code Section 515.5. The California standard is more rigorous than Section 13(a)(1) and Section 13(a)(17) of the Fair Labor Standards Act, which provide exemption for certain types of computer professionals on a federal basis. (The California law may apply when the federal does not-for example, if the employee in question has worked more than 8 hours in a day.)
The computer professional exemption rule does not exclude positions that meet the generally applicable exemption standards under California law but simply offers an additional basis for individuals to qualify as exempt.
No certification or specific academic degree is required for exemption, though many computer professionals may have a bachelor’s degree or higher. Job titles do not establish exemption; it is determined based on a position’s particular duties and characteristics. To answer the reader’s question above, we must use the exemption test provided by Labor Code Section 515.5, outlined below:
An employee is an exempt computer professional if he or she meets all of the following requirements:
- Is primarily engaged in work that is intellectual or creative;
- Is primarily engaged in work that requires discretion and independent judgment;
- Is primarily engaged in duties that consist of one or more of the following:
- Applying systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications
- Applying systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications
- Designing, developing, documenting, analyzing, creating, testing, or modifying computer systems or programs, including prototypes, based on and related to user or system design specifications
- Documenting, testing, creating, or modifying computer programs related to the design of software or hardware for computer operating systems.
- Is highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering
- Is paid at least the minimum hourly rate set annually by the state. The current minimum rate of $47.81 an hour, effective Jan. 1, 2006, was determined by the Division of Labor Statistics and Research and based on the California Consumer Price Index. Moreover, a computer professional is not exempt if any of the following apply:
- The employee is a trainee or involved in an entry-level position, learning to become proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering
- The employee is in a computer-related occupation but has not attained the level of skill and expertise necessary to work independently and without close supervision
- The employee is engaged in the operation of computers or in the manufacture, repair, or maintenance of computer hardware and related equipment
- The employee is an engineer, drafter, machinist, or other professional whose work highly depends on or is facilitated by the use of computers and computer software programs, and who is skilled in computer-aided design software, including CAD/CAM, but who is not in a computer systems analysis or programming occupation
- The employee writes material, including box labels, product descriptions, documentation, promotional material, setup and installation instructions, and other similar written information, either for print or for onscreen media, or writes or provides content material intended to be read by the customers, subscribers, or visitors to computer-related media such as the World Wide Web or CD-ROMs
- The employee creates imagery for effects used in the motion picture, television, or theatrical industry. Our advice: play it on the safe side. If you are unsure whether a position qualifies as exempt, classify the position as nonexempt. In the end, costly legal battles and disgruntled employees cost far more than paying out overtime here and there.
Shari Dunn is managing principal of CompAnalysis, a compensation and performance management consulting firm in Oakland. Nicole Lerner is a senior research associate at the firm.