California has adjusted the minimum compensation rates that computer software employees must be paid to be exempt from state overtime pay requirements.

Effective January 1, 2019, the law will exempt computer software employees whose compensation is at least $45.41 per hour, or an annual salary of not less than $94,603.25 for full-time employment and paid not less than $7,883.62 per month. This is an increase from $43.58 per hour or $90,790.07 annually.

However, additional work-specific requirements must be satisfied in order for an employee to be considered exempt.

Computer Software Employee Exemption

To qualify for this exemption, an employee generally must:

1) Be primarily engaged in intellectual or creative work requiring discretion and independent judgment.

2) Be primarily engaged in duties consisting of one or more of the following:

• Application of systems analysis techniques and procedures to determine hardware, software, or system functional specifications.
• 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.
• Documentation, testing, creation, or modification of computer programs related to the design of software or hardware for computer operating systems.

3) Be highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering.

4) Have compensation of at least $43.58 per hour ($45.41 in 2019), or an annual salary of not less than $90,790.07 for full-time employment ($94,603.25 in 2019) and paid not less than $7,565.85 per month ($7,883.62 in 2019).

For more information, including situations when this exemption does not apply, visit the DLSE glossary.

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