New 2018 Exempt Classification Rates

California’s Department of Industrial Relations (DIR) announced rate changes for the computer software employee exemption and the licensed physician and surgeon exemption. The new rates take effect January 1, 2018.

For the computer software employees’ exemption:

  • The minimum hourly rate of pay exemption increased to $43.58 from its previous rate of $42.35;
  • The minimum monthly salary increased to $7,565.85 from its previous rate of $7,352.62; and
  • The minimum annual salary exemption increased to $90,790.07 from its previous rate of $88,231.36.

For the licensed physician and surgeon exemption:

  • The minimum hourly pay for licensed physicians and surgeons increased to $79.39 from $77.15.

These rates are tied to the California Consumer Price Index (CCPI) for Urban Wage Earners and Clerical Workers. The 2018 rate changes reflect the 2.9 percent increase in the CCPI.

Remember that California’s minimum wage will also increase on January 1, 2018 — this increase will affect the commonly used professional, executive and administrative exemptions. Individuals in these classifications must be paid at least two times the state minimum wage, in addition to meeting all other legal requirements for this exemption.

Download CalChamber’s free white paper 2018 Minimum Wage Hike Brings Changes for California Employers to learn more. Members can access the free minimum wage white paper in the HR Library.

CalChamber members can get more information from the HR Library’s Computer Professional Exemption and the “Exemption for Physicians Paid on a Hourly Basis” on the Professional Exemption pages on HRCalifornia. Not a CalChamber member? See how CalChamber can help you.

Staff Contact: Gail Cecchettini Whaley