The California Department of Industrial Relations has
announced an increase to the pay rates computer software employees and
physicians must receive in order to be exempt from overtime. Additionally, the
minimum salary required for the administrative, professional, and executive
overtime exemptions will also increase. These new rates take effect on January 1, 2020.
Computer software employees and physicians:
Under California Labor Code Sections 515.5 and 515.6, computer software
employees and physicians are exempt from the state's overtime requirements if
they meet specific duties requirements and earn a minimum pay rate. These pay
thresholds are adjusted annually for inflation.
Administrative, executive, and professional employees:
California also has exemptions for bona fide
administrative, professional, and executive employees. To be exempt from
overtime, these employees must meet certain state salary and duties tests. They
must be paid a salary of at least twice the state minimum hourly wage based on
full-time employment of 40 hours per week. Since the state's minimum hourly
wage will increase on January 1, 2020, the minimum salary thresholds for these
exemptions will also increase.
Computer Software Employees:
Computer software employees may be paid on an
hourly or a salary basis in order to qualify for exemption from California's
overtime requirements. Beginning January 1, 2020, these employees must earn at
- $46.55 per hour
(for all hours worked); or
- A monthly salary
of $8,080.71; and
- An annual salary
To qualify for exemption from the state's overtime requirements
in 2020, licensed physicians and surgeons are required to earn an hourly wage
of at least $84.79.
Administrative, Professional, and Executive Employees:
For the administrative, professional, and
executive exemptions, employers with 26 or more employees must pay a salary of
at least $1,040 per week beginning January 1, 2020. Employers
with fewer than 26 employees must pay a minimum salary of at least $960 to
these exempt employees.
California employers with exempt employees
should ensure that they meet the applicable salary and duties tests. Otherwise,
these employees must be classified as non-exempt and are entitled to overtime.