California Announces New 2022 Salary Level for Computer Software Employee Exemption

Are your computer software employees salaried or hourly employees? If they aren’t earning at least $104,149.81 in 2022, you’d better make sure they are being paid by the hour. That’s right, California’s Department of Industrial Relations (DILR) has announced that the salary level for the computer software employee exemption will increase to $50 per hour on Jan. 1, 2022.

Computer Software Employee Exemption

It may surprise you to learn that California State law allows only certain (not all) computer software employees an exemption from California’s breaks, meals and overtime payment requirements. An employee must meet both the salary and duty requirements for the exemption in order to avoid being paid as an hourly employee and being required to take breaks, lunches and be paid for overtime work.

1. Salary Level Requirement

Every year, the computer software employee “exemption salary” is updated by an amount equal to the percentage increase in the California Consumer Price Index (CCPI) for Urban Wage Earners and Clerical Workers. This “salary test” or salary level is effective the following year on January 1.

Due to a 5.3% increase in the CCPI, the salary level for the 2022 computer software employee exemption has increased as follows:

• 2021 Hourly rate from $47.48 to $50.00 in 2022
• 2021 Monthly salary from $8,242.32 to $8,679.16 in 2022
• 2021 Annual salary from $98,907.70 to $104,149.81 in 2022

2. Duty Requirement

To be salaried, a computer professional must not only pass the salaries test, but must also perform certain work duties to qualify as exempt. Examples of exempt computer professionals include those with titles such as skilled computer programmers, computer systems analysts, and computer employees working within software system design specifications.

A complete list of the duty requirements for Computer employees and other positions eligible for exemption from wage and hour laws, such as those for professional employees, executive employees, outside salespersons, and administrative employees is available. Learn more about all of the exemptions here.

More New Law(s) Impact Employers

California employers planning to use the computer software exemption in 2022 should review the exemption requirements and their current salary structure. You need to adjust your payroll to account for these new salary levels. This may mean giving your employees a raise or changing an employee’s exemption status from salaried to hourly employee if your budget can’t handle these increases. And yes, that is legal, even in California.

To learn more about this and more new employment laws, please join us for a CEA 2022 Labor Law Update. Register now for one of our two virtual events being held on December 9 or January 20.