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To be or not to be exempt? A look at the Computer Professional Exemption

August 29, 2016

Author:  Lisa Cooper, HR Business Partner at HR Collaborative, LLC

By now, you may have heard that on December 1, 2016, white collar exempt employees must be paid at least $913 per week ($47,476 annualized), or they will be eligible for overtime compensation for any hours worked over 40 in a pay week under the revised Fair Labor Standards Act provisions. 

But, for the Computer Professionals, employers have a couple of different options. The computer exemption one of only a select few exemptions that doesn’t require employees be paid on a salary basis. Employers have the option to pay their IT folks on an hourly basis, without having to pay time and a half for overtime hours. Here are the two ways, computer professionals can be compensated:

Option #1: The computer employee must be paid on a salary basis at a rate of $913/week 
-OR-
Option #2: The computer employee must be paid on an hourly basis at a rate of $27.63/hour 

Option one maintains that the employee is paid at least $913 per week (although employers can still pay on a bi-weekly or semi-monthly payroll, provided the breakdown is at least $913/week). Our hunch is that many employers will choose this option. 

Under the second option, the employee is paid on an hourly basis and is NOT entitled to overtime compensation. However, some employees may not welcome the notion of having to “punch a timeclock”. And, let’s face it, it’s going to cost the employer more when we look at the numbers on an annualized basis.   $27.63 per hour annualized is over $57,000.   That’s about $10,000 more than the annual expense for option #1. 

Sounds easy enough, right? Not so fast. The Department of Labor has made it very clear that employees not only need to meet the salary and pay requirements, but their job responsibilities must pass the duties test. For a computer professional to be eligible for the FLSA exemption, the employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below. 

The employee’s primary duty must consist 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.

And while an employee’s experience, education or job title has ‘computer’ or ‘IT’ or ‘programmer’ in it, it does not guarantee they’ll qualify for the exemption. In fact, it’s likely that the help desk technicians, network administrators, systems analysts, and computer repair technicians won’t satisfy the duties test and will earn overtime because their primary duty (defined as the main, major or most important duty that the employee performs) is not conducting analysis, design, development, documentation, analysis, creation, or testing of computer systems, programs, prototypes or machine operating systems. Emphasis will be placed on the amount of independent discretion the employee has, versus following a prescribed how-to guide for resolving technical issues. 

Employers are encouraged to do a thorough job analysis to ensure that the position does meet all of the requirements for the duties test. If it doesn’t, employers can look to one of the other duties tests to substantiate the exemption.

For more information on the Computer Exemption, click here.

HR Collaborative is a business consulting firm specializing in strategic human resource management.  We operate in partnership with our clients and as an extension of their HR department.  We help organizations build their HR systems, offering assistance within the broad spectrum of Human Capital Management. Contact:  616.965.7860 or www.hrcollaborative.net.

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