Public agencies are subject to the Fair Labor Standards Act (“FLSA”), a federal law that regulates payment of wages. Under FLSA certain employees are “exempt,” meaning they are not entitled to be paid overtime. Navigating the FLSA exemptions can be a tricky task, but compliance is critical for employers to prevent liability. Failure to classify employees properly can result in large judgments for back wages and attorneys’ fees.
One commonly misapplied exemption is the computer professional exemption. This exemption applies to certain information technology (“IT”) employees. In order to qualify under this exemption, the employee must receive at least $27.63 per hour, or at least $455 per week if the employee’s compensation is on a salary or fee basis. (29 C.F.R. 541.400(b).) In addition to the monetary requirement, any employee who is a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker, must have as the primary duty:
- The application of systems analysis techniques and procedures, including consulting with users to determine hardware, software, or system functional specifications;
- The design, development, documentation, analysis, creation, testing, or modification of computer systems or programs based on and related to user or system design specification;
- The design, documentation, testing, creation, or modification of computer programs; or
- A combination of the above.
The U.S. Department of Labor (“USDOL”) has not provided a list of jobs covered under this exemption, but the Federal Regulations have made it clear that this exemption does not include those employees who are “engaged in the manufacture or repair of computer hardware and related equipment. Employees whose work is highly dependent on, or facilitated by, the use of computers and computer software programs….but who are not primarily engaged in computer systems analysis and programming or other similarly skilled computer-related occupations” also do not fall under this exemption. (29 C.F.R. 541.401.) In addition, the USDOL has found that employees whose responsibilities include troubleshooting and the diagnosis of computer related issues (e.g., “help desk” employees) also do not qualify as exempt.
California has similar laws that allow employers to classify certain technology employees as exempt. (Cal. Lab. Code § 515.5; Wage Order No. 4 §1(A)(3)(h)-(i).) This law is more stringent and specifies that the exemption may only apply if the employee receives at least $49.77 per hour. Fortunately, this law does not apply to public agencies. Public sector IT employees need only qualify under the FLSA computer professional exemption to be exempt, unless another special exemption applies.
Recently, large technology employers, such as Zynga, have been sued for misclassifying IT employees. In these cases, employers had given employees job titles suggesting that they qualified for the exemption when, in fact, the employees’ duties consisted of basic computer related tasks.
In order to avoid misclassifying IT employees, employers should conduct an audit of all technology related positions to determine if any of them are misclassified. During the audit, employers should focus on the tasks the employees perform, not their job titles. Next, if the employer determines it has misclassified a job position or inaccurately described a position, the employer should immediately revise the job description. Finally, and only if necessary, the employer should also remedy any wage violations it may have committed.