New California law narrows overtime regulations for skilled tech workers

Tech companies glum about their sagging stock prices can take cheer in a bill Gov. Arnold Schwarzenegger has signed into law that aims to make it easier for employers to determine which of their workers are exempt from overtime compensation.

A number of technology companies, including Sony, Electronic Arts, Apple and Cisco Systems, had been tripped up by California's overtime regulations, which stated that highly skilled technology workers earning less than $75,000 a year, or $36 an hour, were entitled to OT.

Sounds simple, but the devil is in the math. Companies have contended that as long as the worker's annual salary was at least $75,000, he or she was exempt from overtime pay, regardless of how many hours the employee clocked. Labor advocates have countered that the number of hours worked matters very much: They argued that the regulation in fact required companies to pay $36 or more for each hour worked, or else the employee was due OT.

As a result, programmers, engineers and graphic artists have filed lawsuits in recent years demanding overtime compensation for working long hours without extra pay. Some, including Sony and EA, have paid tens of millions of dollars to settle those cases.

The new law, which Schwarzenegger signed late Tuesday and took effect immediately, eliminates the hourly calculation. It says employers can instead meet the overtime exemption by paying their workers a gross salary of at least $6,250 a month. That equals the same $75,000 a year, but it means that high-tech companies now don't have to worry about keeping track of the number of hours their employees work, said Carol Freeman, a partner at law firm Morgan, Lewis & Bockius in Palo Alto. "There was an ambiguity in the law, and this clarifies that," Freeman said.

Labor advocates said the law, which applies only to highly skilled tech workers, opens the door for companies to force employees to work unlimited hours without paying them anything extra.

"Instead of hiring another worker, companies can just save money by making their existing workers clock twice as many hours," said Caitlin Vega, legislative advocate for the California Labor Federation.

The new law, however, does not clarify one controversial point about the overtime exemption: whether extra compensation such as stock options, bonus or profit-sharing count toward the $75,000 annual figure. So if you're a highly skilled tech worker making $60,000 a year in salary and $20,000 more in extra compensation that's paid out in equal monthly installments, who knows if you're due overtime?

-- Alex Pham

Photo of Gov. Arnold Schwarzenegger by Irfan Khan / Los Angeles Times

Comments

[Deela]

So basically this means your employer can work you steadily daily, weekly, monthly, etc. for 60, 70, 80 or more hours, whatever the employer wants to, as often as he wants to, as long as he pays you $6250 a month??

So if you calculate that hourly on, say, a minimum 60 hour- a-week high tech employee, that's about 26 an hour, and if it's 70 on....even less! Wow...sweat deal for the employer!!

Don't blame me...I didn't vote Schwarzengger in office, that's for sure.

btw...has anyone seen him and his wife's new commercial out, trying to get people to move to California? Gee, I wonder why.
Heard California's running out of money...guess a lot of Californians got a little tired of all those regs and ridiculous cost of living.

What happens in California, SO HAPPENS IN THE NATION.

True story.

[Nugent Dirt]

The Schwarzenegger "Move to California" commericial was pulled because of joint complaints from the governments of China, Korea and India.

China and Korea pointed out that, as legal owners of California, they must approve all advertising in advance. India objected on the grounds that, since California is now actually part of India, the ad was deceptive insofar as it implied that California is still California.

[KW]

This is insane!

$75,000 is not a lot of money for skilled workers. To have to work 60+ hours and not receive overtime pay is a disgrace. Just another way for the companies to screw the workers. This will be a nightmare for many workers, who will be required to work until they drop or lose their jobs.

[Chris SImmons]

Time for them to unionize like the Motion Picture workers.

[Free Will]

OH! WHAH! If you don't like the heat, get out of the kitchen. This is a group of greedy people hopping on the lawsuit band wagon. If you don't like your job, quit, move. whatever.

[Knuckles]

This is a joke. I have been fighting employers for years out here to pay me for the hours I work. This last job I was hired at 50 an hour and after all the hours I worked were added up I made a whopping 6$ an hour.

And this is now legal and I have no way to combat these cheep blood suckers? 90% of the companies I've worked for "full time" (40-80+ hours a week) don't even provide health benefits and now they can use the old phrase more frequently "if you don't like it I have a stack of reels here that want your job" and now we have no foot to stand on. Thanks Arnold. This coming from a guy who made studios take out 100+ million dollar insurance policy and 20+ million to be in a horrible movie.

[Wombaticus]

Corporations are supposed to be a tool for people, not the other way around. Companies have 90% of the power in any employer / employee conflict. This is awful policy.
I expect this from normal 'capitalism is god' types, but I was surprised to see Arnold involved.