California Raises Minimum Salary Threshold to Meet Computer Professional and White Collar Exemptions

December.05.2013

On October 18, 2013, the California Department of Industrial Relations (DIR) announced that the minimum compensation required to qualify for the state's computer-professional overtime exemption in 2014 will increase by 1.2 percent from the 2013 rate. Beginning January 1, 2014, employers will have to pay their computer professionals at least $84,130.53 a year ($7,010.88 monthly) to qualify for the exemption, up from the 2013 rate of $83,132.93. 

In the same vein, on July 1, 2014, minimum wage in California will increase from $8.00 to $9.00 per hour, and further increase to $10.00 per hour on January 1, 2016. This raise impacts the minimum salary threshold to qualify as exempt from California's minimum wage and overtime requirements under the "white collar" exemptions, which include the administrative, executive, and learned professional exemptions. To qualify as exempt under these exemptions, employees must be paid at least double minimum wage. Accordingly, on July 1, 2014, to qualify for a "white collar" exemption, an employee must earn an annual salary of at least $37,440, and beginning January 1, 2016, an annual salary of at least $41,600.

As always, in addition to the compensation requirement, to qualify as exempt, employees must also perform the duties set forth in the applicable Wage Orders (e.g. Wage Order 4) and, for computer professional employees, in Labor Code section 515.5. The duties requirements for each of the exemptions are very fact and circumstance specific. For more information on the exemptions or if you would like to discuss appropriate exemption classifications, please contact a member of the firm's employment practice.