$27.5 million settlement with Siebel Systems. $65 million settlement with IBM. $24 million settlement with Computer Sciences Corporation. Allegations in a recently certified class action against Wells Fargo with up to 3,000 possible class members. These are significant numbers. They come out of settlements and claims against major companies for misclassification of technical support workers.
Many employers used to think that all employees working with computers fell into the “Exemption for Employees in Computer-Related Occupations” under the Fair Labor Standards Act (“FLSA”). However, employees who are using computers or providing services to support computer use are not necessarily exempt from overtime pay requirements. As to an computer professional under federal law, employees must satisfy all of the following criteria:
- Earn a salary of at least $455 per week or a wage of $27.63 or more per hour
- Be a skilled worker, such as a computer systems analyst, computer programmer or software engineer
- Be primarily responsible for systems analysis, computer design, support of computer programs related to machine operating systems, or skills related to the foregoing or a combination of these skills
Employers make a mistake when they assume that someone who is supporting computer use within their organization is exempt from overtime pay requirements (although it is still possible that the person qualifies for another exemption, such as the administrative exemption). Similarly, employees who repair computers may not be deemed exempt either. Even if employees are highly paid or have job titles which sound exempt, they are still not exempt unless they are performing highly skilled work that satisfies the DOL criteria. For instance, technical support or helpdesk employees whose primary responsibilities are to set up computers for new employees and install software updates and patches will likely not be considered to be exempt from overtime pay requirements.
Of course, it is important that employers have an overtime analysis done and properly classify all of their workers in order to avoid costly claims, penalties and attorneys’ fees. This is even more true with computer workers, who are often well-compensated. With significant base salaries, any claim for overtime pay can add up quickly, especially if the claim turns into a class action that encompasses multiple employees.
Employers in California need to be even more cautious. Employees subject to inconsistent federal and state overtime laws get the benefit of whichever law is most favorable. California, nor surprisingly, has very employee-friendly laws, including on the subject of exemptions for computer workers. Indeed, there are plaintiffs’ side law firms that have set up shop specifically to help California-based employees sue their employers, and they are doing so for big money. Employers, be careful out there!