Episode 7: Computer Exemption

Hear how a decades-old landmark law guides today’s employers on some of the most pressing issues facing companies. Bill Martucci, who leads Shook, Hardy & Bacon’s national Employment Litigation and Policy Practice, shares insight in these bite-sized podcasts focusing on the Fair Labor Standards Act. Whether you’re a seasoned general counsel or just finding your way through the myriad of state and federal wage and hour laws, listening to Bill’s soothing discourse is time well spent.

Subscribe on Apple Podcasts, Spotify or YouTube.

TRANSCRIPT

You’re listening to “A Window into Wage and Hour,” a podcast series that shines the light on time and money laws impacting your business today.

Welcome to A Window into Wage and Hour. I am Bill Martucci, the practice group leader for the Shook Hardy National Employment Litigation and Policy practice. And today, we will look at the Fair Labor Standards Act Computer Exemption. The computer professional, the computer employee, the computer-related occupation that can be exempt under some circumstances under the Fair Labor Standards Act.

What are the qualifications? What are the duties that must be met in this particular context? We begin with the idea that the employee must be compensated on a salary or a fee basis at a rate of not less than a certain amount per week. Currently, that’s $684 and compensated on an hourly rate of not less than $27.63 an hour. Those aspects can change, but there is that monetary base.

But what about the focus of the employee? The employee must be employed as a computer systems analyst, computer programmer, software engineer, or in some other similarly skilled worker in the computer field, performing a variety of key duties. This is one of those exemptions that came about after the original passage of the Act and has been meaningful in its application as we become ever more facile and ever more involved in the world of technology.

But what about the primary duty, because truly, as is the case in many situations, it’s that primary duty that truly gives rise to the questions that are applied in the courts. In that regard, the primary duty must consist of the application of a systems analysis, techniques and procedures, including what would be considered consulting with users to determine hardware, software, or system functional specifications. So, we see from that first primary duty focus, it’s the application of systems analysis, techniques and procedures. Another category can be the design, development, documentation, analysis, creation, testing or modification of computer systems or programs. A third category could be the design, testing, creation or modification of computer programs related to the operational systems.

Now, as we think about this exemption, there are a couple of key matters to keep in mind. And then we’ll look at a few cases and see how this exemption has been applied.

The courts have been very careful in construing the Computer Professional Exemption, and specifically the courts have required that this Computer Professional Exemption be focused more on what might be considered highly specialized knowledge of computers and software. In a case involving McKesson Health Solutions out of the Federal District Court in Massachusetts, the court was ever cognizant of this requirement and, in fact, in that particular case, found that the writing of computer code was held to be critical to the analysis of the exemption. Now, in fairness, there are other cases that wouldn’t rely so much on writing computer code and would consider that, whether that existed or not, simply to be one factor.

But the guidance of the McKesson Health Solutions case out of Massachusetts is that it highlights that this is no ordinary computer professional exemption. That, in fact, this contemplates a higher level of responsibility, a higher level of skill, and that, in contrast to the help desk employee, that this exemption would be performed at a higher level as contemplated by the exemption.

In fact, in a number of cases, the courts have been impressed by multiple certificates in network administration and computer development; the actual job duties that would consist of analyzing and testing systems; and that would be such that the individual would not necessarily have to be supervised by great oversight.

A number of clients have raised questions concerning this exemption and the key lesson here is that the exemption is to be applied ever carefully. It is not an across-the-board application. For those, for example, who work on help desks, who support computer users throughout their firm or company, simply by telephone, and who go by straightforward manuals of guidance, they would simply not be exempt. But for those who are more in the analytical mode, who are perhaps software engineers, who work at a higher level, this exemption applies, it’s meaningful, and it has a great deal of application in today’s dynamic workplace.

Thanks so much for being with us.  That wraps up our effort today looking at the Professional Computer Exemption.