California Labor Code 510 requires that “any work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek and the first eight hours worked on the seventh day of work in any one workweek shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee.”

And that “any work in excess of 12 hours in one day shall be compensated at the rate of no less than twice the regular rate of pay for an employee. In addition, any work in excess of eight hours on any seventh day of a workweek shall be compensated at the rate of no less than twice the regular rate of pay of an employee.”

California Labor Code Section 515.5 provides that certain computer software employees are exempt from the overtime requirements stipulated in Labor Code Section 510 if certain criteria are met.

One of the criteria is that the employee’s hourly rate of pay is not less than the statutorily specified rate, which the Department of Industrial Relations is responsible for adjusting on October 1st of each year to be effective on January 1st of the following year by an amount equal to the percentage increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers.

Assembly Bill 10 (Committee on Budget, Chapter 753, Statutes of 2008) amended Labor Code Section 515.5 effective on September 30, 2008, to extend the exemptions to salaried employees whose annual and monthly salaries are not less than the statutorily specified rates, which the department is responsible for adjusting every October 1st of each year to be effective on January 1st of the following year by an amount equal to the percentage increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers.

The State of California Department of Industrial Relations (DIR) just issued new annual adjusted minimum thresholds for computer software employees who are considered exempt from the state’s overtime requirements under California Labor Code Section 515.5.

The department has adjusted the computer software employee’s minimum hourly rate of pay exemption from $53.80 to $55.58, the minimum monthly salary exemption from $9,338.78 to $9,646.96, and the minimum annual salary exemption from $112,065.20 to $115,763.35 effective January 1, 2024.

This increase reflects the 3.3% increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers.

The computer software employee exemption in Section 515.5 generally applies to employees who are “primarily engaged in work that is intellectual or creative and that requires the exercise of discretion and independent judgment,” are “highly skilled,” and have job duties such as computer programming, systems analysis, or software design and testing.

There are several provisions where the exemption does not apply. For example, if the employee is engaged in the operation of computers or in the manufacture, repair, or maintenance of computer hardware and related equipment. Or if 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.

DIR Raises Threshold for Software Employees Overtime Exemption