In California, employees are protected by two main sets of laws that control wages: The federal Fair Labor Standards Act (FLSA) and the California Labor Code.
Under both the FLSA and the Labor Code, there is what is called the Professional Computer Exemption.
There have been many employers who have mistakenly misclassified employees whose duties are computer related as exempt under the Professional Computer Exemption and as a result, have had to face serious monetary consequences. A non-exempt employee who is misclassified as an exempt employee may be able to sue their employer for unpaid wages, interest, damages, and attorney’s fees. Accordingly, it is very important employers look carefully at the requirements if they intend to exempt an employee under this exemption.
In California, exemptions are narrowly construed and only proper if the employer is “plainly and unmistakably” entitled to classify the employee as exempt. If an employee disputes the classification, it is the employer’s burden to prove that the employee was properly classified as exempt. Taylor v. United Parcel Service, Inc., 190 Cal.App.4th 1001, 1010 (2010).
California strictly imposes two criteria to determine whether an employee can be classified as an exempt computer professional employee: (1) the compensation test; and (2) the job duties test.
Both criteria need to be met for the employee to qualify for the Professional Computer Exemption.
In 2020, to meet the compensation test, California employees who are classified as exempt under computer professional employees need to be paid at least $46.55 per hour or an annual salary of at least $96,968.33 (or $8,080.70 per month). Notably, the minimum compensation required to satisfy this exemption is recomputed every year to account for changes in the cost of living.
California does not allow bonuses, commissions, and incentives to be counted in reaching the minimum salary thresholds for exempt status.
The duties test in California remains much more stringent than the duties test under federal law. In California, an employee must spend more than 50% of his or her time performing exempt duties each workweek in order to qualify as exempt from overtime.
To meet the job duties test, California employees who are classified as exempt computer professional employees, the employee must be primarily engaged in work that is intellectual or creative and that requires the exercise of discretion and independent judgment, and highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, or software engineering (primarily here means 50% or more of the employees’ job duties).
Additionally, the employee’s primary job duties must include one or more of the following:
- The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications;
- 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; or
- The documentation, testing, creation, or modification of computer programs related to the design of software or hardware for computer operating systems.
Examples of employees who would generally meet the professional computer exemption duties are systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field. It is not the name of the position, but the types of duties the employee engages in that determine whether he or she can meet the duties test. Generally, employees who primarily duties are to provide IT support services will not meet the duties test.
The Computer Professional exemption does not include employees engaged in the manufacture or repair of computer hardware and related equipment. Employees whose work is highly dependent upon, or facilitated by, the use of computers and computer software programs (e.g., engineers, drafters and others skilled in computer-aided design software), but who are not primarily engaged in computer systems analysis and programming or other similarly skilled computer-related occupations identified in the primary duties test described above, are also not exempt under the computer employee exemption.
Additionally, the Labor Code specifically states that certain employees in the computer field cannot be classified as exempt, even if they meet the compensation test described above. They include:
- Trainees and entry-level employees;
- Employees who have not attained the level of skill and expertise necessary to work independently and without close supervision;
- Employees whose primary job is to operate computers;
- Employees whose primary job is to manufacture computers;
- Employees whose primary job is to repair or maintain computers;
- Engineers, drafters, and other professionals who are assisted by computer software but are not engaged in computer systems analysis, programming, or similar skills associated with the duties of exempt computer professionals;
- Writers who create manuals, instructions, website content, or other materials associated with computer use; or
- Employees who use computers to create imagery for television, movies, or theatrical productions.
Labor Code § 515.5(b)
The Computer Professional exemption does not include employees engaged in the manufacture or repair of computer hardware and related equipment. Employees whose work is highly dependent upon, or facilitated by, the use of computers and computer software programs (e.g., engineers, drafters and others skilled in computer-aided design software), but who are not primarily engaged in computer systems analysis and programming or other similarly skilled computer-related occupations identified in the primary duties test described above, are also not typically exempt under the computer employee exemption.