On January 1, 2025, the overtime exemption rates for computer software employees and licensed physicians will increase — so employers need to make sure that these employees’ hourly rate is not less than the increased specified rates below in order to be exempt from overtime requirements.
Specifically, for computer software employees:
- The minimum hourly rate of pay exemption increased to $56.97 from its previous rate of $55.58;
- The minimum monthly salary increased to $9,888.13 from its previous rate of $9,646.96; and
- The minimum annual salary exemption increased to $118,657.43 from its previous rate of $115,763.35.
For licensed physicians and surgeons:
- The minimum hourly pay increased to $103.75 from $101.22.
These rates are tied to the California Consumer Price Index (CCPI) for Urban Wage Earners and Clerical Workers. The 2025 rate changes reflect the 2.5 percent increase in the CCPI from 2024.
To be classified as an exempt computer professional, an employee must meet certain requirements, including (but not limited to) being:
- Primarily engaged in work that is intellectual or creative;
- Primarily engaged in work that requires the exercise of discretion and independent judgment;
- Primarily engaged in certain duties, such as applying systems analysis techniques and procedures or creating or modifying computer systems or programs;
- Highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming and software engineering; and
- Paid California’s minimum rate of pay or salary as noted above.
Plus, some computer professionals who don’t meet those requirements can still qualify as exempt under one of the other exemptions, such as the administrative or professional exemption.
Additionally, licensed physicians or surgeons who are primarily engaged in performing duties for which licensure is required are exempt from overtime if they’re paid at least the minimum hourly rate set annually by the state.
Remember, on January 1, 2025, California’s statewide minimum wage is scheduled to increase to $16.50 per hour. However, Proposition 32 — if passed this November —would raise the minimum wage to $17 per hour for the remainder of 2024 for employers with 26 or more employees, and then would rise to $18 per hour starting in January 2025. Small businesses with 25 or fewer employees would be required to start paying at least $17 per hour next year, and $18 per hour in 2026.
Keep in mind that any statewide minimum wage triggers an increase in the commonly used professional, executive and administrative exemptions, which require employees to earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment. Beginning January 1, 2025, for the current projected statewide minimum wage of $16.50 per hour, the minimum salary for a full-time exempt employee will be $68,640 per year ($5,720 per month) — in addition to meeting all other legal requirements for this exemption.
Industry-specific minimum wages, such as the health care worker minimum wage that went into effect October 16, 2024, and the fast food worker minimum wage that went into effect in April 1, 2024, impose separate salary tests for exempt employees in those industries.
Katie Culliton, Editor, CalChamber
CalChamber members can read more on the Computer Professional Exemption and the “Exemption for Physicians Paid on an Hourly Basis” on the Professional Exemption pages in the HR Library. Not a CalChamber member? Learn more about how HRCalifornia can help you.
