Computer Employees: Exempt vs. Non-Exempt FLSA Classifications

Friday, June 04, 2010

Is it possible that some “computer” jobs can be classified as exempt for the Fair Labor Standards Act (FLSA) while others could be non-exempt?

Misclassification of any job as exempt vs. non-exempt may result in significant liabilities for the organization. Furthermore, the US Department of Labor appears to be stepping up their FLSA and other labor law enforcement activities as evidenced by an annual report from the by Chicago-based law firm of Seyfarth Shaw L.L.P. in which they reported the top 10 private FLSA payments in 2009 totaled $363.6 million, a 43.9% rise over 2008. In a January 25, 2010 article in Business Insurance written by Judy Greenwald, it is reported that, “The Obama administration's emphasis on regulation and enforcement led to more government-initiated litigation over workplace issues, and employers are expected to encounter more investigations and governmental enforcement lawsuits in 2010.”

Section 13(a)(17) of the FLSA provides that certain computer professionals must paid at least $27.63 per hour, however they are exempt from the overtime provisions of the FLSA. This effectively sets a “minimum wage” for selected “computer” jobs, while at the same time exempting those same jobs from the overtime provisions of the FLSA. While this may seem like a contradiction in terms, there are precedents for this provision in other job families. For example, Farm implement salespeople are exempt from the overtime provisions of the FLSA, but not minimum wage provisions. FLSA provides for a number of “targeted” exemptions from minimum wage, overtime, and even the child labor provisions of the law. To add to the complexity and confusion, the US Department of Labor allows some computer related jobs to be exempt for both minimum wage and overtime under the executive, management, and/or administrative provisions provided it can be shown that those jobs meet the exclusion test for executive, managerial, and/or administrative functions. To compound the issue even more, it is possible that individual job duties within any job can vary between exempt and non-exempt work depending on the specific work assignment. Thus, it is feasible, that any given job could be 40% exempt and 60% non-exempt.

How can you be confident that “your” computer related jobs are properly classified as exempt or non-exempt? Only a detailed job and/or position analysis will yield the information needed to make a sound judgment call. To reach that level of confidence, the organization should consider the following:

1. Review the written job or position description, if available.

2. Interview the incumbent employee(s), if available.

3. Interview the immediate supervisor or manager of the employee or position.

4. Compare and contrast the findings from the job or position description and/or

    interviews with the exemption criteria.

5. Document various aspects of the job or employee under review and determine

    which exemptions do or do not apply.

6. Remember, a given job or employee maybe exempted under the

    provisions for executive, managerial and/or administrative functions.

7. If audited, this documentation could prove invaluable to halting any

    litigation beyond the audit stage.

8. If it is discovered that a specific job has been misclassified as exempt,

    the organization should consider determining if there have been lost

    wages due to failure to pay minimum wage and or overtime and

    compensate the impacted employee(s).

As always, in dealing with governmental regulations and oversight, you should seek out qualified professional legal advice and counsel before talking any potential action that might place the organization at some risk.