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California employers have obtained limited relief from onerous overtime requirements as a result of new laws recognizing additional exemptions for certain computer software and nursing professionals.
Background
Federal and state law both address whether employers must pay overtime wages to their employees or whether an employee is "exempt" from overtime pay. Historically, California employers have focused on California law as the state overtime laws tended to be more protective of employees than federal law.
This has been especially true since the beginning of this year when daily overtime again became California law. Unlike federal law that requires overtime pay for non-exempt employees after 40 hours in a week, California law now requires employers to compensate all non-exempt employees at an overtime rate or all hours worked in excess of eight in a day, as well as forty in a week. Daily overtime has proved to be very expensive, especially in the healthcare and software industries, where highly compensated employees have not met the state requirements for an overtime exemption.
Despite daily overtime, California law still recognizes overtime exemptions for administrative, managerial and professional employees who spend more than half of their time engaged in exempt work. However, to meet the exemption the employees must be paid on a salaried basis and receive no less than the equivalent of twice the minimum wage based upon a 40 hour week. Most nurses and software professionals did not qualify for the exemption either because they were paid on an hourly basis or their duties were not viewed as being exempt duties recognized under the three categories of exemption (the regulations defining the professional exemption specifically excluded nurses).
The legislation enacted in September - and effective immediately -- expands the professional exemption category to specifically include highly compensated computer software professionals and three types of certified nurses.
Computer Software Professionals
Employers no longer must pay hourly overtime rates (one and a half time regular rate for hours in excess of eight and up to twelve or double for hours exceeding twelve) to computer software professionals earning at least $41 per hour who spend more than half their time engaged in intellectual or creative work that requires the exercise of discretion and independent judgment. Thus, to qualify, such employees can be paid on an hourly as opposed to a salary basis. Until now no statute or regulation clearly explained what would be deemed "intellectual or creative work" in the computer software profession. The new law now provides improved guidance, noting the following as exempt type duties:
- applying system analysis techniques,
- designing, developing, documenting, analyzing, creating, testing or modifying computer systems or programs; or
- documenting, testing, creating or modifying computer programs related to the design of software or hardware for computer hardware systems.
In addition, the employee must be highly skilled and proficient in computer systems analysis, programming and software engineering.
The exemption does not apply to employees who merely operate, manufacture, repair or maintain computer hardware, or to trainees or those at an entry level who require close supervision.
Nurses
California law now recognizes limited professional exemptions in the nursing fields. The three categories that now meet the professional exemption are:
- certified nurse midwives;
- certified nurse anesthetists; and
- certified nurse practitioners.
As with all professional exempt employees (except computer professionals), these nurses will need to be paid on a salary basis at the monthly equivalent of at least twice the minimum wage based upon a 40 hour week.
Risks
With these new enactments clarifying exempt categories, employers should expect greater enforcement efforts by the Division of Labor Standards Enforcement and heightened awareness by employees of their exempt status. documenting, testing, creating or modifying computer programs related to the design of software or hardware for computer hardware systems.
In addition, the employee must be highly skilled and proficient in computer systems analysis, programming and software engineering.
The exemption does not apply to employees who merely operate, manufacture, repair or maintain computer hardware, or to trainees or those at an entry level who require close supervision.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
