Schwarzenegger Terminates Overtime for Many Computer Programmers

On October 11, 2007, Governor Arnold Schwarzenegger signed a law that eliminates the right to overtime for many computer programmers in California effective January 1, 2008.  Historically, California has always provided overtime pay to computer programmers.  During this time of overtime pay, the computer industry in California grew far more than other states and drove the economy in Silicon Valley. 

The first time that computer programmers were exempted from overtime was under the 2001 law. However, this law required a very high wage to be paid to programmers in order for them to be exempt from overtime. 

This year, a bill sponsored by the National Association of Computer Consultant Businesses puts an end to computer overtime for many programmers.  The proponents of the law stated that the current law was putting California businesses at a "competitive disadvantage."  Interestingly, there was no explanation about why so many companies would locate their computer programmers in California despite this alleged "competitive disadvantage."

What the law does is reset the minimum pay required in order to be exempt from overtime from $49.77 to $36 per hour.  Under the old rate, only highly compensated individuals were exempt from overtime.  Now, even entry level computer programmers will be able to be exempt from overtime. 

Fortunately, the law still retains the requirement that $36 per hour be paid for every hour worked.  Thus, it is not the case that simply earning a salary of $74,880 per year will automatically make you exempt.  This salary would only make you exempt if you never worked more than 40 hours in a single week (essentially, you would just be exempt from daily overtime -- that is, you would work more than 8 hours in one day, as long as you worked less hours the next day).  If you worked 45 hours in any week, you would need a salary of $84,240 in order to keep you above the $36/hour limit.  I have a complete breakdown of the salary required for different work weeks on my California Computer Professional Exemption page.

It will be interesting to see how this new law plays out. Previously, many computer programmers were reluctant to sue for unpaid overtime.  However, with the law now taking it away, I would predict that it will cause even more lawsuits as employees want to receive the money they are entitled to while they still can.  Given that employees can still go back four years for past unpaid overtime, I doubt the law will have the desired affect.

Comments

[ddrohde]

Is this new law retro-active for previous years, or is it just from this point forward?

[Michael Tracy]

No, the law only affects work performed after Jan 1, 2008.

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