In accordance with CA Labor Code Section 515.5(a)(4), the director of the Department of Industrial Relations (DIR) recently announced an adjustment to the computer software employee’s minimum hourly rate of pay exemption. The Office of Policy, Research and Legislation (OPRL) is responsible for determining the adjustments each October 1 with effective dates set for January 1 of the following year.
The verdict is out: the 2013 rate of $39.90 will increase by 0.48 cents to $40.38 effective January 1, 2014. The minimum monthly salary exemption will change from $6,927.75 to $7,010.88. Additionally, this brings the minimum annual salary exemption to $84,130.53 up by $997.60.The calculations reflect a 1.2% increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers.
History
Pursuant to AB 1835, the DIR was established to make formal decisions regarding wage claims, investigate discrimination and public works complaints, and enforce Labor Code statutes and Industrial Welfare Commission (IWC) orders. The IWC’s which cover wages, hours and working conditions must be posted in the workplace for employees to view. In fact, the IWC should be posted in close proximity to the official California Minimum Wage Notice.
Dictated by California overtime laws, Labor Code Section 515.5, an employee in the software field is considered exempt when all of the following apply:
(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.
(4) The employee’s hourly rate of pay is not less than forty dollars and thirty eight cents ($40.38) effective January 1, 2014 or, if the employee is paid on a salaried basis, the employee earns an annual salary of not less than eighty four thousand one hundred thirty two dollars and 53 cents ($84,132.53) for full-time employment, which is paid at least once a month and in a monthly amount of not less than seven thousand ten dollars and 88 cents($7,010.88).
The exemption does not apply to an employee if any of the following apply:
(1) The employee is a trainee or employee in an entry-level position who is learning to become proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering.
(2) 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.
(3) The employee is engaged in the operation of computers or in the manufacture, repair, or maintenance of computer hardware and related equipment.
(4) The employee is an engineer, drafter, machinist, or other professional whose work is highly dependent upon or 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 engaged in computer systems analysis, programming, or any other similarly skilled computer-related occupation.
(5) The employee is a writer engaged in writing 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 who writes or provides content material intended to be read by customers, subscribers, or visitors to computer-related media such as the Internet or CD-ROMs.
(6) The employee is engaged in any of the activities set forth in numbers 1-4 above, for the purpose of creating imagery for effects used in the motion picture, television, or theatrical industry.
Which IWC Do I Need if I Employ Computer Software Employees?
The computer software employee exemption is covered under IWC #4; Professional, Technical, Clerical, Mechanical and Similar Occupations. Customize IWC #4 for your business. Reach out to one of our Compliance Advisors by calling Compliance Poster Company at 800.817.7678.