The Fair Labor Standards Act requires covered employers to pay minimum wages and overtime compensation to certain categories of employees. However, the law contains several exceptions or “exemptions” from these requirements, most of which turn on a combination of the employees’ pay and the nature of their job duties. For example, Section 13(a)(1) of the FLSA provides an “exemption” from both minimum wage and overtime pay for certain categories of so-called “white collar” employees — namely, employees working as bona fide executive, administrative, professional, or outside sales employees. Section 13(a)(1) and Section 13(a)(17) also exempt certain categories of computer employees.
To qualify for a computer employee exemption, employees must be paid on a salary or fee basis at not less than $684 per week (as of January 1, 2020) or on an hourly basis of at least $27.63 per hour, and have job duties that satisfy certain requirements. The computer exemption can apply to computer systems analysts, computer programmers, software engineers, and other similar computer workers who receive the minimum salary or hourly pay, and whose job duties meet certain tests. Importantly, job titles do not determine whether an employee is exempt from the FLSA. For an employee to be exempt, her actual real-life job duties and pay must meet all the requirements of the FLSA and the Department of Labor’s implementing regulations.
This post will focus on the exemptions for computer employees. The Department of Labor Fact Sheet #17E is an excellent resource for information about the computer employee exemption. The DOL’s implementing regulations with respect to the computer employee exemptions are generally located at 29 C.F.R. §§ 541.400-402.
Examples of Employees Who May Qualify for the Computer Employee Exemption
FLSA regulations provide some examples of types of employees who may qualify for the computer employee exemption (provided certain pay and job duties requirements are met):
(a) Computer systems analysts, computer programmers, software engineers or other similarly skilled workers in the computer field are eligible for exemption as professionals under section 13(a)(1) of the Act and under section 13(a)(17) of the Act. Because job titles vary widely and change quickly in the computer industry, job titles are not determinative of the applicability of this exemption.
29 C.F.R. § 541.400(a). Therefore, job titles are not determinative of whether a particular employee qualifies for this exemption. To qualify, the employee’s job duties and compensation must meet the criteria discussed below.
General Criteria for the Computer Employee Exemption – Compensation
To qualify for the computer employee exemption (and therefore, not be entitled to receive overtime pay under the FLSA), an employee’s compensation must one of the following requirements:
- The employee must be compensated either on a “salary basis” or “fee basis” (as defined in 29 CFR § 541.602 (salary basis) and 29 C.F.R. § 541.605 (fee basis)) at a rate not less than $684 per week (lower amounts apply for non-federal employees in U.S. territories) exclusive of “board, lodging, or other facilities” (as defined at 29 C.F.R. § 541.606); or
- If paid on an hourly basis, under 29 U.S.C. §213(a)(17), at a rate of not less than $27.63 an hour.
General Criteria for the Computer Employee Exemption – Job Duties
In addition, FLSA regulations provide that under either section 13(a)(1) or section 13(a)(17) of the FLSA, the computer employee exemptions apply only to employees whose “primary duty” consists of:
(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.
This test therefore turns on identifying the employee’s “primary duty”, which the Department of Labor has defined in its implementing regulations, discussed below.
Definition of “Primary Duty”
As used in the FLSA regulations, “primary duty” means:
[T]he principal, main, major or most important duty that the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.
FLSA regulations identify several “factors to consider” when determining the primary duty of an employee. These factors include, but are not limited to
- the relative importance of the exempt duties as compared with other types of duties;
- the amount of time spent performing exempt work;
- the employee’s relative freedom from direct supervision; and
- the relationship between the employee’s salary and the wages paid to other employees for the kind of nonexempt work performed by the employee.
Further, the regulations provide that the amount of time an employee spends on certain work can be useful in determining the employee’s primary duty:
(b) The amount of time spent performing exempt work can be a useful guide in determining whether exempt work is the primary duty of an employee. Thus, employees who spend more than 50 percent of their time performing exempt work will generally satisfy the primary duty requirement. Time alone, however, is not the sole test, and nothing in this section requires that exempt employees spend more than 50 percent of their time performing exempt work. Employees who do not spend more than 50 percent of their time performing exempt duties may nonetheless meet the primary duty requirement if the other factors support such a conclusion.
Exemption Does Not Apply to Computer Manufacture and Repair.
FLSA regulations further provide that the computer employee exemption does not apply to employees whose primary duty is computer manufacture or repair:
The exemption for employees in computer occupations does not include employees engaged in the manufacture or repair of computer hardware and related equipment.…
Exemption Does Not Apply to Employees Whose Work is Highly Dependent On Computers, So Long as the Primary Duty Test is Not Met.
The regulations further provide that the computer employee exemption is not available for employees whose work depends on computers or software programs, so long as the primary duty test discussed above is not met:
…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 identified in § 541.400(b), are also not exempt computer professionals.
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