On September 8, 2005, Governor Schwarzenegger signed Assembly Bill No. 1093 into law. This Bill expands the hourly rate exemption requirement for computer software employees. The Bill takes effect on January 1, 2006.
Usually, under both federal and state law, an employee must be paid on a salary basis to qualify for the executive, administrative, and professional exemptions (Exemption means that an employee is unable or exempt from receiving overtime pay).
However, California Labor Code Section 515.5 requires that, in order to be exempt from overtime, an employee must not be paid less, on an hourly basis, than a specified rate (currently $45.84 per hour) for all hours worked.
Employers have often disregarded this section and paid their employees on a salary basis, believing that salary pay is acceptable as long as the salary equals the specified hourly rate based on only a 40-hour workweek. This is a wrong interpretation of the law, and has subjected some employers to wage and hour class action lawsuits.
AB 1093 allows an employer to pay a computer professional on a salary basis as long as the salary is equal to or greater than what the employee would be paid on an hourly basis, at the specified hourly rate in Section 515.5, for all hours worked.
“If the pink slip doesn’t fit,
get redressed!”