1. Office of the Director

Minimum Rate Required per Classroom Hour for Exempt Instructors at Non-Profit, Private Higher Education Institutions (Labor Code section 515.7)

California Labor Code section 515.7, added to the Labor Code by AB 736 (Irwin, stats. 2020, ch.44), provides that if an employee is employed to provide instruction for a course or laboratory at an "independent institution of higher education," (defined as all "nonpublic higher education institutions that grant undergraduate degrees, graduate degrees, or both, and that are formed as nonprofit corporations in this state and are accredited by an agency recognized by the United States Department of Education" [see Education Code section 66010]), the employee shall be classified as employed in a professional capacity under Wage Order No. 4-2001 of the Industrial Welfare Commission, or under Wage Order No. 5-2001 of the Industrial Welfare Commission, when certain criteria apply. If the stated criteria are met, the employee is exempt from overtime pay requirements, and is also exempt from paragraphs (2), (3), and (9) of subdivision (a) of Labor Code section 226, and Labor Code sections 510 and 512 (related to hours of work, overtime and meal period requirements).

One of the criteria is that the employee must be paid on a salary basis, as defined, and must receive one of the following minimum compensations:

Either:

(A) A monthly salary equivalent to no less than two times the state minimum wage for employment in which is the employee is employed for at least 40 hours per week;

or

(B) When employed per course or per laboratory, the salary must be calculated on the basis of a minimum payment per "classroom hour," as specified in the statute.

A "classroom hour" means "the time spent in the primary forum of the course or laboratory, regardless of whether the forum is in-person or virtual." The minimum payment for "classroom hours" encompasses payment for "all classroom or laboratory time, preparation, grading, office hours, and other course- or laboratory-related work for that course or laboratory."

Labor Code section 515.7, subdivision (b), specifies the minimum payment required for each "classroom hour" in order for the "professional" classification (and related exemptions from overtime and related requirements) to apply. For the years 2020, 2021, and 2022, the statute specified the dollar amount required for that year. Starting with 2023, the statute requires a percentage increase (over the prior year) "equal to the percentage increase to the state minimum wage calculated in accordance with subdivision (c) of [Labor Code] section 1182.12."

The table below specifies the minimum payment required per "classroom hour."

As is reflected in the above table, and in accordance with Labor Code section 515.7, the department has adjusted the minimum payment per "classroom hour" from $139.50 (the 2023 rate) to $144.00, effective January 1, 2024, reflecting the 3.23% increase in the California Minimum Wage.

For more information about the annual adjustment of the state minimum wage, which is calculated by Department of Finance based, in very general terms, on the Consumer Price Index, among other factors, please see Labor Code section 1182.12, and the following information on this website.

Please contact your local Labor Commissioner's Office for any questions.

October, 2023