CA adjusts overtime exemptions for computer software employees, physicians
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Tuesday, October 27, 2020

CA adjusts overtime exemptions for computer software employees, physicians

By Payroll and Entitlements Editorial Staff

The California Department of Industrial Relations has adjusted the wage thresholds for computer software employees and for licensed physicians and surgeons to be considered exempt from state overtime requirements. The changes in the exemption rates, which take effect January 1, 2021, are based on a 2% increase in the cost of living.

Computer software employees. 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 (CCPI).

The index value of the CCPI for the period August 2019 (271.22) to August 2020 (276.751) reflects a 2.0% change from 2019.

Therefore, in accordance with Labor Code Section 515.5(a)(4), the Department has adjusted the computer software employee's minimum hourly rate of pay exemption from $46.55 to $47.48, the minimum monthly salary exemption from $8,080.71 to $8,242.32, and the minimum annual salary exemption from $96,968.33 to $98,907.70 effective January 1, 2021.

Licensed physicians and surgeons. Similarly, California Labor Code Section 515.6 provides that certain licensed physicians and surgeons are exempt from the overtime requirements stipulated in Labor Code Section 510, if certain criteria are met. One of the criteria in the law is that the employee's hourly rate of pay is not less than $55.00, effective January 1, 2002. The Department of Industrial Relations is responsible for adjusting this pay rate 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. Last year, the Department adjusted the rate to $84.79, effective January 1, 2020.

In accordance with Labor Code Section 515.6(a), the Department has adjusted the licensed physicians and surgeons' minimum hourly rate of pay exemption from $84.79 to $86.49 effective January 1, 2021, reflecting the 2.0% increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers. (State of California Department of Industrial Relations, Office of Policy, Research and Legislation, Overtime Exemption for Computer Software Employees, October 1, 2020; and State of California Department of Industrial Relations, Office of Policy, Research and Legislation, Overtime Exemption for Licensed Physicians and Surgeons, October 1, 2020).

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