On January 1, 2026, the overtime exemption rates for computer software employees and licensed physicians will increase, so employers must ensure these employees’ hourly rates are not less than the updated rates listed below to remain exempt from overtime requirements.
Each year, the California Department of Industrial Relations (DIR) adjusts this pay rate by an amount equal to the percentage increase in the California Consumer Price Index (CCPI) for Urban Wage Earners and Clerical Workers. The 2026 rate changes reflect the 3.3 percent increase in the CCPI from 2025.
Specifically, for computer software employees:
- The minimum hourly rate of pay exemption increased to $58.85 from $56.97;
- The minimum monthly salary increased to $10,214.44 from $9,888.13; and
- The minimum annual salary exemption increased to $122,573.13 from $118,657.43.
For licensed physicians and surgeons:
- The minimum hourly pay increased to $107.17 from $103.75.
To be classified as an exempt computer professional, an employee must meet certain requirements, including but not limited to being:
- Primarily engaged in intellectual or creative work;
- 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.
Some computer professionals who don’t meet those requirements may 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 requiring licensure are exempt from overtime if they’re paid at least the minimum hourly rate set annually by the state.
Remember: On January 1, 2026, California’s statewide minimum wage is scheduled to increase to $16.90 per hour. This increase also affects the minimum salary requirements for full-time exempt employees. Beginning January 1, 2026, the minimum salary for a full-time exempt employee will be $70,304 per year ($5,858.67 per month).
Industry-specific minimum wages, such as the various health care worker minimum wage rates (some which increased on July 1, 2025), and the fast food worker minimum wage, impose separate salary tests for exempt employees in those industries.
Stay tuned to HRWatchdog for California cities and counties that will increase their minimum wage rates on January 1, 2026.
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.
