The minimum amount Computer Professionals in California must be paid to be considered exempt from overtime has now crossed the $40 mark.
The Fair Labor Standards Act (FLSA) requires most American employees to be paid at a rate of 1.5 times their regular rate when they work more than 40 hours per week. Employees who fall into certain job classifications, as defined by the FLSA, can be exempt from overtime. In most cases, those exempt employees must be paid on a salary basis, but the FLSA does allow workers in “Computer-Related Occupations” to be exempt as long as they are making no less than $27.63 per hour.
Of course, California has its own overtime rules, and they set a different minimum pay rate for Computer Professionals. This rate is adjusted yearly based on the California Consumer Price Index for Urban Wage Earners and Clerical Workers. Effective January 1, 2014, the minimum hourly rate Computer Professionals in California must be paid to be exempt from overtime is $40.38, as a result of the 1.2% increase in the Index. You can read the actual Memorandum on this increase at http://www.dir.ca.gov/oprl/ComputerSoftware.pdf
If you run your own back-office for W-2 contractors and have Computer Professionals on board for whom you are not paying overtime, you will want to make sure they still qualify to be exempt in light of this update. And remember, it’s not just the pay rate that determines the proper classification. You also want to make sure that, based on their actual duties, they qualify for the exemption under the FLSA and any applicable state laws.