News + Events
A Welcome Change to California’s Labor Law Regarding Overtime for Skilled Technology Workers
February 9, 2009
Chad C. Almy
On September 30, 2008, California Governor Arnold Schwarzenegger signed Assembly Bill 10 (AB 10) into law. AB 10 amends the existing overtime exemption requirements for computer professionals under Section 515.5 of the California Labor Code. Section 515.5 has recently caused many technology companies based or with employees in California to dole out large settlements to highly skilled technology workers for neglecting to pay them overtime wages. AB 10 provides relief to such employers by broadening the exemption requirements with respect to two areas: (1) employee duties and (2) employee compensation.
In altering the employee duties requirement, AB 10 broadens the exemption by allowing more employees to be properly designated as "highly skilled." Previously, employees met the duties prong for the computer professionals’ exemption only if they were "highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering." AB 10 changes the above italicized ‘and’ to an ‘or,’ significantly broadening the number of employees who may properly qualify for this exemption.
The second change also gives employers the ability to properly exempt a much larger number of employees from overtime pay. Under Section 515.5, highly skilled workers were previously exempt only if they made at least $36 per hour or the annualized, full-time salary equivalent of that rate. This generated significant debate as to whether an employee was exempt if the employee earned over $75,000 per year, but worked more than 40 hours per week. This question has been answered by AB 10, which now exempts all employees with an annual salary of $75,000 or more who are paid not less than $6,350 per month. Under AB 10, a highly skilled employee who meets this pay level will be exempt from overtime wages regardless of the actual number of hours worked.