Computer professionals in California are frequently misclassified as “exempt” employees by their employers.

Under California’s labor laws (Labor Code Section 515.5), many of these professionals are not being paid the overtime pay that they are entitled to.

Continue reading if you are a computer professional who has been classified as “exempt” by your employer — you may be entitled to overtime.


California employees are entitled to minimum wage. Additionally, employees who work more than 8 hours in a day, over 40 hours in a week, or seven consecutive days are entitled to overtime pay. 

However, some employees are exempt from overtime laws, as well as laws regarding rest and break periods. Both California and federal law make some exemptions for computer professional employees. Sometimes state and federal laws offer very similar protections. However, when these two laws diverge, California employers must follow the law that is most beneficial to employees.

The computer professional exemption applies to employees whose daily tasks involve “theoretical and practical application of highly specialized knowledge in computer systems analysis, programming, and software engineering” (5 CFR 551.207). Employers frequently misclassify employees as exempt computer professionals, preventing them from receiving rightfully earned overtime.

In order to determine if a computer professional is exempt from overtime, two tests must be conducted: the compensation test and the job duties test. If just one of these tests is failed, then the employee is entitled to overtime.

Compensation Test

The compensation test requires that the employee be paid equal to or more than a specific wage. As of December 1, 2019, California employees must receive at least $46.55 per hour or $96,968.33 annually. This compensation figure is adjusted on October 1 of every year, and is implemented on December 1. Be sure to check with California’s Department of Industrial Relations for any updates to these wage requirements.

So, if a computer professional in California is paid less than $46.55 per hour or $96,968.33 per year, then he or she is automatically entitled to overtime. If an employee is paid equal to or more than these hourly or annual rates, he or she passes the compensation test and is not entitled to overtime pay on that basis. However, even if employees make too much under the compensation test, they might still be entitled to overtime if they fail the job duties test. 

Job Duties Test

The job duties test is a three-part test. Even if an employee’s annual salary is more than the current minimum, computer professionals must have job duties that satisfy three requirements in order to be exempt from overtime.

According to LC 515.5, the employee must be:

(1) Primarily engaged in work that is intellectual or creative and that requires the exercise of discretion and independent judgment; AND

(2) Highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, or software engineering.

Lastly, (3) the employee’s primary job duties (50% or more) must consist of at least one 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; or

(C) The documentation, testing, creation, or modification of computer programs related to the design of software or hardware for computer operating systems. ⁠

Regarding (1), Courts have generally recognized that exercising “discretion and independent judgment” involves evaluating possible courses of action and making decisions about which one to take. Ahle v. Veracity Research Co., 738 F. Supp. 2d (2010). Determining if the employee had sufficient discretion and independent judgment often depends on factors such as whether the employee can deviate from company policies without prior approval. Fenton v. Farmers Ins. Exch., 663 F. Supp. 2d 718 (D. Minn. 2009). 

Concerning (2), the employee’s specialized knowledge of computers must be actively applied in their job duties. It is not enough that the employee simply understands software engineering or programming; instead, employees must be applying this knowledge in their work.

Related to (3), the law recognizes that employees of certain occupations are automatically entitled overtime pay, even if they pass the compensation test. These positions include: 

a. Trainees or employees in entry-level positions

b. Computer-related occupations where the employee has not obtained the level of skill and expertise needed to work independently

c. Employees engaged in the operation of computer or in the manufacture, repair, or maintenance of computer hardware and related equipment 

d. Engineers, drafters, machinists, or other professionals whose work is highly dependent on computers or computer software programs but are not engaged in computer system analysis, programming, or any other computer-related occupation

e. Writers engaged in writing material, such as product descriptions, setup and installation instructions

f. Employees using a computer for creating imagery for motion picture, television, or theatrical industry. 

Examples: Compensation Test and Job Duties Test in Action

Ivan Technician, IT Worker

To better understand when an employee might be entitled to overtime pay, let’s look at the following example:

Ivan Technician works as an IT worker and makes $100,000 per year. The majority of his work involves making repairs to computer hardware. Ivan has a lot of experience working with computers and is allowed to decide how to make repairs. He also occasionally handles troubleshooting issues and passes this information on to his superior. Is Ivan entitled to overtime?

First, we must look at the compensation test. As mentioned above, employees who make more than $96,968.33 annually are not entitled to overtime on the basis of their compensation. Because Ivan makes $100,000 per year, he passes the compensation test.

So, we must turn to the job duties test next. As mentioned previously, this is a three-part test. Ivan may (1) exercise sufficient “discretion and independent judgment” in his IT work. He may also be (2) a highly skilled IT worker who is applying his knowledge. However, (3) Ivan is not primarily engaged in work that would make him exempt. He performs work involving the maintenance of computer hardware, which is not exempt. Because of this, he fails the job duties test.

Because Ivan fails the job duties test, he is owed overtime under California law.

Tony Stark, Software Designer

The following is an example of when an employee might be exempt from overtime:

Tony Stark is a software designer for Stark Industries. He works 60 hours per week and is paid an annual salary of $150,000. Mr. Stark has a long history of software engineering. The majority of his job duties include engineering software for and overseeing the entire production of J.A.R.V.I.S., the company’s latest Artificial Intelligence software. Is he exempt from overtime?

Because the cutoff for the compensation test is $96,968.33, and Mr. Stark makes $150,000 per year, he passes the compensation test for exemption.

Next, we conduct the job duties test. (1) Mr. Stark is engaged in intellectual work, exercises sufficient “discretion and independent judgment” in this work; and (2) he is a highly skilled software engineer who is applying this knowledge. Lastly, (3) Mr. Stark is primarily engaged in work that involves creating software. On these bases, he likely satisfies the job duties test.

Because Mr. Stark passes both the compensation test and the job duties test, he is likely exempt from overtime under California law.


A California employee is only exempt under the computer professional exemption if both tests are met:

(1) the employee is paid the minimum required annual salary in accordance with the compensation test; AND 

(2) the employee satisfies the three requirements of the job duties test.

If one, or both, tests are failed, an employee is not exempt from overtime pay. The compensation test involves a straightforward calculation of rate of pay. By contrast, the job duties test is a three-part test that requires analyzing what an employee does in a typical workday. If an employee is misclassified, this may create an avenue to collect unpaid overtime.

If you are a California employee who has been misclassified under computer exemption laws, contact our office today.