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DIR INCREASES EXEMPTION RATES FOR COMPUTER EMPLOYEES & PHYSICIANS


California Labor Code Sections 515.5 and 515.6 provide overtime pay exemptions for computer software employees who satisfy tests relating to the amount of their pay and duties.  They also provide an overtime pay exemption for some physicians and surgeons.  In order to qualify for either exemption, an employee’s hourly rate of pay must not be less than statutorily specified rates.

The California Department of Industrial Relations (“DIR”) is responsible for adjusting the rates October 1st of each year to be effective on January 1st of the following year.  The adjustments are based on an amount equal to the percentage increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers.

1. Computer Software Employees

On October 19, 2018, the DIR issued a memorandum announcing increases in the rates that will take effect on January 1, 2019.  The DIR adjusted the computer software employee’s minimum hourly rate of pay for the exemption from $43.58 to $45.41.  It also increased the minimum monthly salary from $7,565.85 to $7,883.62, as well as the minimum annual salary from $90,790.07 to $94,603.25.  This reflects the 4.2% increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers.

2. Licensed Physicians

On the same date, the DIR announced an increase in the amounts necessary to utilize the overtime exemption for licensed physicians and surgeons.  Under Labor Code Section 515.6, licensed physicians and surgeons are exempt from the overtime requirements 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 a specified amount.  The DIR announced that this hourly rate will increase from $79.39 to $82.72, effective January 1, 2019.

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