There are federal and state overtime and minimum wage laws. Because California's laws are more generous, employers and workers should usually focus on California law. Workers performing some types of work are "exempt" from overtime pay and minimum wage laws. Courts usually construe exemptions narrowly and against the employer. But the types of work exempt from overtime have grown considerably over the past 25 years.
The law requires that any person who works more than eight hours in a day, or 40 hours in a week, receive 1.5 times regular base pay for the period that exceeds these limits. Any person who works more than 12 hours in a day or more than eight hours on the seventh consecutive day of work is entitled to two times regular base pay for the time that exceeds these limits. No agreement between a worker and her employer to waive overtime pay is valid. In California, the Division of Labor Standards Enforcement (DLSE) enforces wage and hour laws.
California Labor Code Section 515.5 provides that computer professionals are exempt from overtime if their employment meets the following criteria:
The new minimum non-exempt wage rate became effective October 1, 2015 and represented an increase in the hourly rate from $40.38 to $41.85 per hour. The monthly rate increased from $7,165.12 to $7,265.43 and the minimum annual salary increased from $85,981.40 to $87,048.
This means that any computer professional paid less than $87,048 per year (or $41.85 per hour) is not an exempt employee in California and must be paid hourly and compensated for overtime. Additionally, merely paying $87,048 per year is not enough. The job and the employee must also meet the other requirements listed.
Over the years, overtime exemptions have grown. Because many people are innumerate when it comes to their own time and wages, workers often see "exempt" status as a badge of superiority and "non-exempt" as some sort of blue collar stigma. Entry level junior partners at top ten law firms earn roughly $200,000 per year and work 80 hours per week. This translates to about $96 per hour. While that is a great wage, a lieutenant highway patrolman in Nevada makes base pay of $80.53 per hour and is entitled to overtime, bringing his average wage in an 80 hour week to at least $100.66 per hour (assuming he never breaks the double time mark). The highway patrolman also receives a retirement pension of 90% of salary for life after 25 years of work.
The qualifications for a highway patrol lieutenant is graduation from high school and about five years of experience. The partner at a top ten law firm must study for at least seven years past high school while not earning income, graduate from one of the best and most competitive law schools in the nation, work very long hours for at least five years, and often face debilitating student loan debt in excess of $100,000 and sometimes double that. Who seems the smarter worker here?
The smug postmodern worker who feels a badge of accomplishment in receiving the same pay regardless of whether she works 38 hours or 100 hours per week ought to learn to use a calculator. The deterioration of working conditions and family life in the United States can be traced in large part to expanding exemptions that play havoc on the innumerate American mind. Most exempt workers have little idea what they are being paid per hour because their time is not sufficiently valuable to them to bother calculating it.
Regular pay for overtime calculations is the hourly rate, or calculated hourly rate from salary. The regular hourly rate includes nondiscretionary bonuses paid based on hours worked, production or proficiency. Bonuses and pay excluded from regular pay for overtime calculation purposes include: special bonuses for "good service" or "loyalty," expense reimbursements, vacation pay, premium pay for weekend or holiday work, gifts and other pay not dependent on hours worked.
If sued, an employer has the burden to prove that a worker's job is exempt and so it is wise for employers to carefully consider and document why they believe a certain worker's job to is exempt before paying the worker as if exempt. Merely claiming a job is exempt and then "leaving it to later" tp produce an explanation and documentation is bound to turn out badly.
Exemptions are typically applied based on the duties the worker performs in an individual workweek. Employees performing both exempt and non-exempt duties in the same workweek are normally not exempt in that workweek.
The Industrial Welfare Commission (IWC) issues "Wage Orders" interpreting the wage and hour laws. The IWC allows some exceptions to required overtime, for example agreed upon "4-10" work weeks do not require the employer to pay overtime where the worker works 10 hours per day four days per week instead of eight hours per day five days per week.
Additional overtime exempt employees include:
Administrative, executive and managerial workers. Workers who spend more than half of their work time in administrative, executive or professional duties are generally exempt. The IWC and courts have found that bookkeepers, secretaries, and clerks who do not perform work directly related to management policies or general business administrative work are non-exempt. Merely claiming that a worker is administrative does not make him exempt.
IWC and the courts have found many claimed executive, managerial and administrative workers to be non-exempt including:
Professional workers who must have certain licenses to perform work are exempt from overtime laws.
Computer Software Professionals are exempt only if they work in highly theoretical aspects of computer software and make more than $41.85 per hour. It is notable that there are hundreds of thousands of computer programmers, systems analysts, and other computer software workers who neither work in highly theoretical aspects of computer software nor are paid $41.85. The law requires both conditions to be met for the worker to be exempt.
Commissioned sales employees of retail or service establishments are exempt from overtime if more than half of the employee's earnings come from commissions and the employee averages at least one and one-half times the minimum wage for each hour worked.
Computer programmers, systems analysts and other software and hardware-related workers are exempt under federal law (FLSA) Section 13(a)(17) if they are paid at least $27.63 per hour. But if employed in California, the more restrictive California requirement controls.
Drivers, driver's helpers, loaders and mechanics are exempt from the overtime pay provisions of the FLSA if employed by a motor carrier, and if the employee's duties affect the safety of operation of the vehicles in transportation of passengers or property in interstate or foreign commerce.
Farmworkers employed on small farms are exempt from both the minimum wage and overtime pay provisions of the FLSA. Young workers employed on small farms, with parental consent, are also exempt from the child labor provisions of the FLSA. Other farmworkers are exempt from the FLSA's overtime provisions.
Salesmen, partsmen and mechanics employed by automobile dealerships are exempt from the overtime pay provisions of the FLSA.
Seasonal and recreational establishments: Employees employed by certain seasonal and recreational establishments are exempt from both the minimum wage and overtime pay provisions of the FLSA.
Executive, administrative, professional and outside sales employees (as defined in Department of Labor regulations) and who are paid on a salary basis are exempt from both the minimum wage and overtime provisions of the FLSA.
Employers may not defend that the worker's overtime was unauthorized. If the worker works overtime, the employer must pay overtime. Because the employer is charged with responsibility to control the workplace, an employee performing unauthorized work should be excluded from the worksite, disciplined, or terminated, but the worker is entitled to pay including overtime for work performed.