In the last couple of weeks, two TechRepublic articles explored the work rules that affect technical, or computer, workers (A 40-hour week? Not in IT and Why programmers are not subject to protective labor laws). This is a quick and, I hope, helpful explanation of the laws covering this issue.
First, understand that there are federal laws and state laws. The federal law, called the Fair Labor Standards Act (FLSA), governs which employees must be paid overtime for hours worked over forty. There are many exceptions to the law, one of which can be applied to what the FLSA calls “computer professionals.”
There are also state laws that can override the federal law if they are more favorable to the employee. For example, some states do not recognize the legitimacy of the computer professional exception, or “exemption” as it is called in FLSA parlance. If you work – the controlling law is that of the state in which you perform your duties, not where you live – in such a state, being classified as an exempt computer professional is not allowed.
Salary is well defined for computer professionals. Hourly exempt computer professionals are entitled to their hourly rate for every hour they work. If an employee is making less than $27.63 per hour (more in California), he or she cannot be an hourly exempt computer professional. Computer employees may also be classified as salaried exempt. This is much less common, but the minimum salary for exempt salaried employees is $455.00 per week (again, more in California). Salaried exempt employees must receive their salary each week, without reductions for hours worked under forty (with a few exceptions), but they need not be paid overtime.
Important points: Exemption is at the discretion of the employer. These rules are about the minimum required; there is nothing that prevents an employer from paying more than the minimum.
What is the definition of an exempt computer professional? The federal law requires that the employee be performing, as a primary duty (the most important part of the job, usually but not always consuming at least 50% of the employee’s time), one of the following:
(1) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
(2) The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
(3) The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
(4) A combination of the aforementioned duties, the performance of which requires the same level of skills.
An exempt computer professional does not include “. . . employees in computer occupations . . . engaged in the manufacture or repair of computer hardware and related equipment. Employees whose work is highly dependent upon, or facilitated by, the use of computers and computer software programs (e.g. engineers, drafters and others skilled in computer-aided design software), but who are not primarily engaged in computer systems analysis and programming or other similarly skilled computer-related occupations . . .”
As you can see, there is a lot of grey area between the absolutely exempt and the absolutely not exempt. However, the Department of Labor has been fairly strict in its interpretations of the regulations. They have declared, for example, that the usual activities of system administrators do not meet the regulatory requirements. Help desk personnel, too, are not eligible for exempt status. If you perform either of those two jobs as your primary duty, you should be receiving time and a half for overtime.
You may have seen references in the past three or four years to lawsuits against large technology companies for violation of the FLSA. Many of these were as a result of misclassifying computer employees as exempt when they did not meet the regulatory definition. Certainly, the rapid change rate in the computer field has made keeping up with jobs and their responsibilities a challenge. Nonetheless, that is the duty of the employer – to know the duties of their employees and to classify them accordingly. Job titles are irrelevant – what an employee does is what matters. Even an employee’s professional credentials and academic record do not make a computer professional. The focus must be on what the person does in the workweek. If those responsibilities change, exempt status may need to be reconsidered. One common example of this is the transition from programmer or other hands-on computer job to technical project manager. This switch may well result in the employee being converted from an exempt computer professional entitled to his/her hourly rate for every hour worked to a salaried exempt employee, eligible for no overtime pay.
The FLSA is a complicated law, particularly in the area of computer professionals. The courts have issued contradictory rulings, and the Department of Labor, having just changed the FLSA in 2004, is unlikely to undertake further amendments for some time.
Helpful information can be obtained at the Department of Labor website, www.dol.gov. Make your way to the Employment Standards Administration and Wage & Hour Division pages. The Department of Labor has multiple Fact Sheets on exemptions that can be downloaded.
Of necessity, this blog gives quite basic information about a complex topic. It addresses the federal law with only a brief mention about how state law might change a situation. Nonetheless, I hope that this has answered some of the more common questions readers have had about why their pay varies from the more standard time and a half overtime paycheck.