As technology
continues to expand and evolve, employers increasingly are needing the services
of highly-skilled computer programmers, software engineers, systems analysts,
and similar employees. Often, these employees desire flexibility and autonomy
in their work schedules. Fortunately, the FLSA and California law enable
employers to offer flexibility to these employees, as they both provide a
complete minimum wage and overtime pay exemption for employees engaged in
certain computer-related occupations.
The FLSA and
California computer employee exemptions are very similar in two important
respects. First, these exemptions have nearly identical duties requirements,
covering the same types of high-level computer-related positions.
Second, both
exemptions contain compensation requirements that permit employees to be paid
on a salaried or an hourly basis, provided that the employee is paid an amount
that meets the required minimum salary or hourly pay levels.
The fact that
the FLSA and California exemptions are so similar often enables employers with
operations inside and outside of California to consistently classify their
high-level computer employees. However, such employers must remember that
California’s compensation minimums are significantly higher than the FLSA’s
minimums, and that California’s required compensation levels adjust annually
(unlike the FLSA’s minimums, which are not subject to annual adjustment and
will not be affected by DOL’s proposed regulatory amendments which would
increase the salary levels for the “white collar” exemptions). Therefore,
employers relying on California’s computer employee exemption must review
employees’ compensation levels annually to ensure that each employee is paid at
a rate that is at least the required minimum amount.
The annual
compensation review also may be a good time for employers to evaluate their
exempt computer employees’ work duties to ensure that they continue to meet the
requirements for exempt status. Below are the duties and compensation
requirements for the FLSA and California exemptions.
Duties Requirements
To qualify as an
exempt computer employee under the FLSA and California law, the employee must
be employed as a systems analyst, computer programmer, software engineer, or in
a computer position requiring similar skills, and must have a primary duty that
consists of one or more of the following:
1.
The application
of systems analysis techniques and procedures, including consulting with users,
to determine hardware, software or system functional specifications;
2.
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;
3.
The design,
documentation, testing, creation or modification of computer programs related
to computer operating systems.
In California,
the employee must be “primarily engaged” in one or more of the above duties,
meaning that the employee must spend more than 50% of the employee’s work time
engaged in such duties. In addition, California law specifically provides that
certain computer-related positions do not qualify as exempt. The exemption does
not apply if any of the following criteria are met:
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 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; or
6.
The employee is
engaged in any of the activities set forth in subdivision (a) for the purpose
of creating imagery for effects used in the motion picture, television, or
theatrical industry.
The FLSA does
not contain such a list of specific positions that do not qualify for the
computer exemption. However, courts and the DOL have reached similar
conclusions with respect to the scope of the FLSA’s computer exemption,
finding, for example, that employees engaged in IT support or “help desk”
positions, or the manufacture or repair of computers, do not meet the computer
exemption requirements.
Compensation Requirements
The FLSA’s
computer employee exemption requires that the employee be paid on a salary
basis at a rate of not less than $455 per week, or on an hourly basis at a rate
not less than $27.63 an hour. While California law also permits computer
employees to be paid on a salary or an hourly basis, the required levels are
significantly higher. Beginning January 1, 2016, computer employees must be
paid on an hourly basis at $41.85 per hour, or on a salary basis at a salary of
at least $7,265.43 per month (or $87,185.14 per year). These amounts are
adjusted each October (to be effective at the beginning of the next calendar
year) in accordance with the California Consumer Price Index for Urban Wage
Earners and Clerical Workers.
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