When you're dealing with the Cal. Labor Code 515.5 exemption, it's my understanding that the hourly rate is dependent upon the hours worked in a week. So, for example, if you are salaried and work 40 hours one week, your calculated hourly rate would be higher that week than in a week where you worked 50 hours.

If that hourly rate dips below $36/hour, you may be non-exempt. Assuming that's right (and please correct it if it's wrong :)), here are my questions:

1. Being pushed into non-exempt status (with an hourly rate under $36/hour) would destroy your exemption (period. Not just for that week). Is that right?

2. Would it fly for a company to go ahead and up your weekly salary to keep you above the $36/hour mark in any week where you worked enough hours to dip you below it (and then lower it back for any week where you didn't)? This seems foreign to me, and it seems to be circumventing the hourly/salary distinction...but I don't know much about the programmers' exemption.

I'm not trying to be lazy, if you know where I can look it up (that's not Simmons and Rutter, where I've already been) please let me know. I've not dealt with the programmers' exemption before, and this is Greek to me!

Thanks in advance for any input.

No, you're misreading it.

If your job duties meet the criteria for the Computer Professional exemption, the employer may pay you either a minimum of $640/week salaried OR pay you on an hourly basis for all hours worked of at least (I think it is now)$49.77 per hour. If you are paid on a salaried basis, the "calculated" hourly rate is irrelevant; in that case, all that matters is that the salary is at least $640 weekly.

I defer to your expertise here--but could you explain a bit more?

Here's what I found in the Rutter Guide:
11:406
"Certain employees engaged in computer software design and development and who are employed at an hourly rate of at least [$36--down from $41, which was correct at the time of publication] (adjusted annually by DIR to reflect Consumer Price INdex), or the annualized full-time salary equivalent of that rate, are exempt from overtime pay requirements."

followed by
11:406.1
"Every hour: The exemption applies only if the employee actually receives the minimum hourly rate ($49.77 as of 1/1/07) for each hour that she works. In other words, for a salaried employee, the effective hourly rate must exceed the minimum rate for every hour worked. Long overtime hours may bring many high-salaried employees below the minimum rate and render them nonexempt, if they were not already."

So, from reading that, and the Simmons section on the same, it seems to me that the salary must pay the minimum rate for every hour. In other words, if you are paid $2000/week and work 60 hours, you're making $33.33/hour and that could destroy your exemption.

Is that wrong? Sorry to be thick if this is really simple--I appreciate your advice.

The problem is this. There is not one single type of Exempt classification, but rather there are many. If we are talking about CLC 515.5 only, then employees under that must be paid on a hourly basis. Your question assumes that we have a salaried employee under the CLC 515.5 rules, which is not possible on it's face. If you look at the rest of the CLC 515, including for example 515(a) you will see the following. And if you look at the Wage Orders (industry specific regulations) you will see that computer programers (for example) are included as one of the sub catagories under the Professional exception.

The other complication is that this is mostly federal law (FLSA). CA has higher then federal minimum rates, but otherwise just follows the federal rules as is and does not bother to repeat them. The CLC 515 group mostly is just spelling out what rules CA has in addition to the federal rules without repeating the federal rules.
Federal White Collar rules (http://www.dol.gov/esa/regs/compliance/whd/fairpay/main.htm)

From CLC 515(a)
"The Industrial Welfare Commission may establish exemptions from the requirement that an overtime rate of compensation be paid pursuant to Sections 510 and 511 for executive, administrative, and professional employees, provided that the employee is primarily engaged in the duties that meet the test of the exemption, customarily and regularly exercises discretion and independent judgment in performing those duties, and earns a monthly salary equivalent to no less than two times the state minimum wage for full-time employment".

I defer to your expertise here--but could you explain a bit more?

Here's what I found in the Rutter Guide:
11:406
"Certain employees engaged in computer software design and development and who are employed at an hourly rate of at least [$36--down from $41, which was correct at the time of publication] (adjusted annually by DIR to reflect Consumer Price INdex), or the annualized full-time salary equivalent of that rate, are exempt from overtime pay requirements."

followed by
11:406.1
"Every hour: The exemption applies only if the employee actually receives the minimum hourly rate ($49.77 as of 1/1/07) for each hour that she works. In other words, for a salaried employee, the effective hourly rate must exceed the minimum rate for every hour worked. Long overtime hours may bring many high-salaried employees below the minimum rate and render them nonexempt, if they were not already."

So, from reading that, and the Simmons section on the same, it seems to me that the salary must pay the minimum rate for every hour. In other words, if you are paid $2000/week and work 60 hours, you're making $33.33/hour and that could destroy your exemption.

Is that wrong? Sorry to be thick if this is really simple--I appreciate your advice.

I don't know who those authors are, and they very well may be attorneys, but I'd sure like to see cases that support what they are saying. I disagree 100% with their interpretation.

Fritz799: It seems to me that the salary must pay the minimum rate for every hour. In other words, if you are paid $2,000/week and work 60 hours, you're making $33.33/hour and that could destroy your exemption. Is that wrong?

No, you are 100% correct!

DAW: If we are talking about CLC 515.5 only, then employees under that must be paid on a hourly basis. Our question assumes that we have a salaried employee under the CLC 515.5 rules, which is not possible on it's face.

Not true! LC 515.5 specifically allows employers to pay employees on an hourly basis (currently not less than $36.00/hour) or salary basis (provided the effective hourly rate never - not even in one workweek - drops below the current $36.00/hour floor).

Fritz799: It seems to me that the salary must pay the minimum rate for every hour. In other words, if you are paid $2,000/week and work 60 hours, you're making $33.33/hour and that could destroy your exemption. Is that wrong?

No, you are 100% correct!

DAW: If we are talking about CLC 515.5 only, then employees under that must be paid on a hourly basis. Our question assumes that we have a salaried employee under the CLC 515.5 rules, which is not possible on it's face.

Not true! LC 515.5 specifically allows employers to pay employees on an hourly basis (currently not less than $36.00/hour) or salary basis (provided the effective hourly rate never - not even in one workweek - drops below the current $36.00/hour floor).

Any cases to back up the underlined relative to exempt employees paid on a salaried basis? I'm not convinced this is what the law says.

And is there anything in CA law that says a qualified computer professional cannot be paid $640/week the same as any other employee under the Professional exception?

Pattymd: I'm not convinced this is what the law says.

Your doubts notwithstanding, this is the law of the land in California.

DAW: And is there anything in CA law that says a qualified computer professional cannot be paid $640/week the same as any other employee under the Professional exception?

LC 515.5(a)(4): The employee's hourly rate of pay may not be less than thirty-six dollars ($36.00), or the annualized full-time salary equivalent of that rate, provided that all other requirements of this section are met and that in each workweek the employee receives not less than thirty-six dollars ($36.00) per hour worked.

This is fun. Exempt classifications only work if all of the tests are passed, and clearly in the OPs question clearly the payment basis test has failed. The question that I am asking, and that BSPCPA apparently does not want to actually answer, is whether or not the employee could be eligible for one of the other white collar exceptions. I keep re-reading the CLC 515.5 rules and I cannot seem to find the rule that says an employee who fails the 515.5 is not eligible for any of the other white collar exceptions. Perhaps BSPCPA can show me where it actually says this? Thank you.

I am going to grab a big tub of buttered and salted popcorn, sit back and watch this show.

DAW: This is fun.

What is fun - guessing at the law and hoping you are right?

I jumped onto this post to advise the OP that he was correctly interpreting LC 515.5 -- computer software employees can be paid on a salary basis and considered exempt if certain conditions are satisfied.

You obviously did not know this, as you specifically advised the OP:

1. "If we are talking about CLC 515.5 only, then employees under that must be paid on an hourly basis."

2. "Under the CLC 515.5 rules, it is not possible on it's face to have salaried employees."

Nothing personal, but your analysis of LC 515.5 is simply wrong, and I felt it important to set the record straight for the OP.

DAW: The question that I am asking, and that BSPCPA apparently does not want to actually answer...

There is no shame in not "knowing everything," but it is shameful to twist, turn, and create argument to diffuse your mistaken beliefs.

If you want my opinion on a certain aspect of the law, create a new thread and ask the question respectfully. I will be happy to respond.

I don't know who those authors are, and they very well may be attorneys, but I'd sure like to see cases that support what they are saying. I disagree 100% with their interpretation.

As far as I know the interpretation is correct.

California Labor Code §515.5
(a) Except as provided in subdivision (b), an employee in the computer software field shall be exempt from the requirement that an overtime rate of compensation be paid pursuant to Section 510 if all of the following apply:
(1) The employee is primarily engaged in work that is intellectual or creative and that requires the exercise of discretion and independent judgment, and the employee is primarily engaged in duties that consist of one or more of the following:
(A) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications.
(B) The design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to, user or system design specifications.
(C) The documentation, testing, creation, or modification of computer programs related to the design of software or hardware for computer operating systems.
(2) The employee is highly skilled and is proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering. A job title shall not be determinative of the applicability of this exemption.
(3) The employee's hourly rate of pay is not less than thirty-six dollars ($36.00), or the annualized full-time salary equivalent of that rate, provided that all other requirements of this section are met and that in each workweek the employee receives not less than thirty-six dollars ($36.00) per hour worked. The Division of Labor Statistics and Research shall adjust this pay rate on October 1 of each year to be effective on January 1 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.


I keep re-reading the CLC 515.5 rules and I cannot seem to find the rule that says an employee who fails the 515.5 is not eligible for any of the other white collar exceptions.

Typically not. The California Labor Code (and federal law) defines exemptions by an employees "primary responsibilities", "primary duties" or how the employee spends "more than half of their time" in their course of work.