Labor and Employment Law Blog

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.

Unpaid Internships - Common but Illegal

A common, but frequently unreported labor violation is the use of unpaid interns in violation of minimum wage and possibly overtime laws.  The scenario is fairly typical: a company offers an opportunity to ‘break into the business’ in exchange for the intern working for free.  You see many examples of this in the entertainment industry.  In fact, despite jobs sites such as Craigslist prohibiting the posting of unpaid “internships,” you can almost always find one posted.  Some companies try to get around the law by requiring that the internship be part of a college program.  However, there is no exception to the law allowed just because the “intern” may receive college credit.  While it might be possible for a college credit course to require some type of training for a company, the vast majority of these internships are in violation of Federal as well as California labor laws.

In order to qualify as an unpaid internship, the requirement is simple:  no work can be performed that is of any benefit at all to the company.  That is, you can not deliver mail, sort files, file papers, organize a person’s calendar, conduct market research, write reports, watch television shows and report on them, read scripts, schedule interviews, or any other job that assists the employer in any way in running their business.   

Examples of internships that have been legal are where the job is a “dummy” job.  For example, there was a case of an internship for working on a train.  The company had the interns driving trains from one end of their yard to the other under close supervision.  The moving of the trains was completely unnecessary and was just being done to train the potential employees. As such, no “work” was being performed, so the internship was legal.  On the other hand, if the workers were moving the trains as part of the regular re-positioning of the trains, but were still performing it under close supervision, they would be required to be paid for the work.

Thus, if in the entertainment industry, you read scripts that have already been read and rejected by the company and the company will not use your input in any way but is simply instructing you on how to read scripts, then they would not need to pay you for your time.  However, if you read the scripts and perform any work that is used by anyone in the company to make any type of decision about that script, then you must be paid for your time.

Another common type of unpaid internship is in martial arts schools that require students to teach classes in order to receive additional belts.  This practice is illegal unless the student is paid for the time.  Because the act of teaching a class is work that benefits the employer, it must be paid for.   

The U.S. Department of Labor has outlined a list of criteria that ALL must be met in order for an internship to be unpaid.

1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
2. The training is for the benefit of the trainee;
3. The trainees do not displace regular employees, but work under close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the completion of the training period; and
6. The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.

From the above list, #4 is really the key one – all the others will follow from whether the employer derives any immediate benefit from the activities.

The main reason that you do not see more lawsuits regarding unpaid internships is that the interns are very unlikely to sue.  In most cases, they fear being blacklisted, as they will undoubtedly need to use the internship as a reference to get any future work.

This is where California’s Private Attorney General Act comes in.  Because this law allows anyone at the company to sue for labor violations, even if they themselves are not affected by the violation, it is now possible for these companies to be brought into compliance with the law.  If you work for a company that uses unpaid interns and would like to put an end to this illegal practice, you should consider bringing a Private Attorney General cause of action.

Of course, if the internship is work, not only minimum wage must be paid, but also California overtime (8 in a day / 40 in a week) as well as meal and rest breaks.