Correctly classifying employees as exempt or non-exempt under the Fair Labor Standards Act (FLSA) can be a difficult task. Particularly difficult can be classifying employees who work in your information technology (IT) department. Employers commonly believe that, because IT personnel are often highly trained and skilled, well paid and work irregular hours with little or no supervision, they are likely exempt from overtime requirements under the FLSA. However, many IT personnel who merely maintain and troubleshoot company computer systems are not considered exempt employees under the Act. Therefore, in order to avoid costly violations of the FLSA, a careful analysis is necessary to determine the appropriate classification of each individual IT position.
In addition to the more general exemptions for administrative, professional, executive, and highly compensated employees, employees who work with computers may qualify as exempt personnel under the FLSA’s “computer professional” exemption. Section 13(a)(17) of the FLSA states that the Act’s overtime requirements shall not apply to:
any employee who is a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker, whose primary duty is –
A. the application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications;
B. 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;
C. the design, documentation, testing, creation, or modification of computer programs related to machine operating systems; or
D. a combination of duties described in sub-paragraphs (A), (B), and (C) the performance of which requires the same level of skills.
In addition to the criteria above, an employee must meet one of two other standards to be considered exempt as a computer professional. First, if the employee is compensated on an hourly basis, he or she must be paid at a rate of not less than $27.63 per hour. Second, if the employee is compensated on a salary or fee basis, such compensation must be at a rate of not less than $455 per week.
The federal regulations associated with § 13(a)(17) of the FLSA explicitly state that the computer professional exemption does not apply to employees engaged in the manufacture or repair of computer hardware and related equipment. Nor does the exemption apply to employees whose work is highly dependent on the use of computers and computer software programs (such as engineers, drafters, and others skilled in computer-aided design software), but who are not primarily engaged in computer systems analysis and programming.
The regulations also note that “because job titles vary widely and change quickly in the computer industry, job titles are not determinative of the applicability of this exemption.”
The primary case addressing the classification of an employee as a computer professional for purposes of exemption under the FLSA is Martin v. Indiana Michigan Power Co. 381 F.3d 574 (6th Cir. 2004). This case involved an employee with the title of “IT Support Specialist.” Classified by the employer as an exempt computer professional under the FLSA, the employee brought a claim in federal district court to recover unpaid overtime. The district court granted summary judgment for the employer, finding that the employee was indeed exempt as both an administrative employee and a computer professional. On appeal the Sixth Circuit reversed, holding with regard to the employee’s status as a computer professional:
Martin does not do computer programming or software engineering; nor does he perform systems analysis, which involves making actual, analytical decisions about how [the company’s] computer network should function. Rather, Martin’s tasks–installing and upgrading hardware and software on workstations, configuring desktops, checking cables, replacing parts, and troubleshooting Windows problems–are all performed to predetermined specifications in the system design created by others. As Martin testified, he is provided the standard “desktop” for installation on the computers he configures, but he is not involved in determining what the desktop should look like.
Although the federal regulations have been slightly revised since the 2004 Sixth Circuit decision, a 2006 U.S. Department of Labor Wage and Hour Division opinion, addressing almost identical circumstances, suggested that the Martin court’s holding remains applicable.
Employers should remember that whether an IT employee is exempt as a computer professional under the FLSA is largely fact specific. Additionally, even in the event an IT employee does not qualify as a computer professional, he or she may still fall under one of the FLSA’s more general exemptions. Only by carefully evaluating each position can employers avoid the potential costs of improperly classifying their IT employees.