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
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
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 primary5
responsibilities6 must include at least one of the
The application of systems analysis
techniques and procedures, including consulting with users, to
determine hardware, software, or system functional
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
2 The Consumer Price Index is a measure of average
change over time in the prices of fixed market goods and services
and is considered to be an effective measure of
3 Although exempt from overtime, a computer professional
paid on an hourly basis must be paid for every hour worked. When
exempt employees are paid on an hourly basis, employers ought to
protect themselves by ensuring an agreement with the employee is in
place to guarantee a minimum salary in compliance with §515.5.
To do otherwise may allow the employee to challenge their exempt
status and receive overtime back pay. Negri v. Koning &
Assoc., 216 Cal. App. 4th 392 (2013).
4 While historic CPI rate data has generally resulted
in a required salary increase, that has not always been the case.
Between 2008 and 2009, the CPI decreased by 1.4%, and the DIR
elected to maintain the then-existing rate. Similarly, although the
CPI increased by 1.1% in 2010, the DIR elected to maintain the
5 More than 50% of an employee's worktime must be
spent on one or more of these exempt duties. Cal. Lab. Code §
6 Cal. Lab. Code § 515.5(a)(2).
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