San Francisco Employment Law Firm Blog

Like with many other employment laws in general and wage laws specifically, there is no bright line rule that defines which employees are exempt from overtime, and which workers are entitled to overtime compensation. Below, I will try to make the job of both employers and employee who try to apply professional exemption to their situation easier and more certain.

For the purposes of determining professional exemption, the term "professional" means any employee who: (1) is compensated on a salary or fee basis at a rate of no less than $455 per week (periodically adjusted); (2) whose primary duty is the performance of work (a) requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; or (b) requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. 29 C.F.R. 541.300(a).

The phrase "work requiring advanced knowledge" is the key part which is the most commonly litigated and disputed element of the rule. According to regulations, this includes work requiring consistent (although not necessarily constant) exercise of discretion and judgment, as distinguished from routine mental, manual, mechanical or physical work. An employee who performs work requiring the advanced knowledge generally uses the advanced knowledge to analyze, interpret or make deductions from a set of facts. The advanced knowledge required to be exempt as a professional cannot be attained at a high school level.

The above principle is applied to different professions in a way that draws a distinction between workers who must have an advanced degree to qualify for the position held and necessarily use their advanced education in the scope of their work, and those who don't. Thus, CPA's and financial analyst with a degree in finance generally qualify as exempt professionals, while accounting clerks, bookkeepers and other employees who perform routine billing work are not exempt. Dental Hygienist and Physician Assistants are generally exempt as those position require an advanced four-year degree. Chefs, such as executive and sous chefs, who have a degree in culinary arts are generally exempt, while cooks are not. Paralegal and legal assistants are generally not exempt, as a degree in paralegal studies is generally not a prerequisite to holding a paralegal position.

Thus, as the above examples show, one of the key questions that needs to be asked in determining whether a professional exemption applies to a particular employee is whether his job/position requires and advanced degree, and he actually uses the knowledge acquired in the course of obtaining that degree in his day-to-day duties.

California Labor Code section 515.5 defines who qualifies for a computer/technology professional exemption from overtime compensation. There are three main requirements:
(1) the employee must be doing work that is "intellectual or creative" and it should require "discretion and independent judgment," which requires more than just deciding which procedures to follow but must involve substantial decision making that have real effect on the operation of the employer's business. Generally, programming, coding and creating databases qualifies as such work as it involves inquiry and innovation and it affects the quality and the usability of the software created.
(2) The employee's responsibilities primarily consist of "systems analysis techniques and procedures, including consulting with users:" these professionals must work in the "design, development, documentation, analysis, creation, testing, or modification of computer systems or programs" or similar work with computer programs "related to the design of software or hardware for computer operating systems.

(3) The professional employee must be able to engage in the "theoretical and practical application of highly specialized information to computer systems analysis." It is important to note that the employee's job title is not determinative of whether the job will qualify under this factor, and it's the nature of the job performed by the employee in question that will determine whether the employee engages in these complex functions.

California employment law also requires that these employees be paid at least $36 per hour as of January 1, 2008 in order to be exempt from overtime. This figure is adjusted every year. It can also be expressed in annual equivalents. Thus, in order to be exempt in 2008, an employee under the IT professional exemption must be paid $74,880 per year if he or she works 40 hours per week; $93,600 for 50 hours per week; $112,320.00 for 60 hours per week, and so on.