California employers must ensure that compensation rates for computer professionals meet new salary thresholds, effective January 1, 2023.

As inflation continues to rise, so too have the minimum wage thresholds for the California Computer Professional exemption. [1] Indeed, the California Department of Industrial Relations (DIR) published a memo on October 14, 2022, increasing the compensation threshold for exempt computer professionals by 7.6%, compared to the 2022 rates. The compensation rates are adjusted annually to account for inflation according to the California Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers. [2]

To qualify for the California computer professional exemption, starting January 1, 2023, California employers must pay their computer professional employees a salary of at least $112,065.20 annually ($9,338.78 monthly) or an hourly wage of $53.80 every hour worked. [3]

DUTIES TEST REMAINS UNCHANGED

In addition to the increased salary requirement, a California computer professional must also still satisfy the duties test set forth under California Labor Code Section 515.5, which remains unchanged. The California computer professional employee’s primary responsibilities must include at least one of the following:

• The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system-functional specifications.
• 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.
• The documentation, testing, creation, or modification of computer programs related to the design of software or hardware for computer operating systems. [4] , [5]

The California computer professional must also be highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, or software engineering. Moreover, the duties test generally requires the computer professional to be primarily involved in work that is intellectual or creative and that requires the exercise of discretion and independent judgment. The Labor Code also specifies certain duties that do not qualify.

STANDARD FOR FEDERAL EXEMPTIONS DIFFERS FROM CALIFORNIA TEST

The California test for computer professionals differs from the federal regulations under the Fair Labor Standards Act (FSLA). Under the US Department of Labor (DOL), employees in computer-related occupations must meet a salary of at least $684 per week ($35,568 per year) or an hourly wage of $27.63 per hour to qualify for the federal exemption.

Employers with computer professionals in their workforce across multiple states should consider how they will address pay rates across different states, especially since the new California computer professional exemption salary is now greater than the salary threshold of $107,432 for the federal highly compensated employee exemption, which provides another avenue for exemption outside of California.

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