Was Computer Engineering Employee Exempt From Overtime?

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By Howard Perlman

“With all the hours I've put into this job, I deserve more pay, including overtime,” said Tony, a computer software developer.

“The primary responsibilities you performed indicated that under the law, you did not need to be paid more than your salary, especially overtime pay,” said Chris, a payroll manager.

FACTS:A computer engineering employee who worked for a mortgage company was paid more than $100,000 each year that he worked for the company. The company considered him to be exempt from the Fair Labor Standards Act's minimum wage and overtime requirements.

Primary duties of the computer engineer included developing software and selecting technologies for addressing computing needs. The company considered the computer engineer to be its expert and engineering leader for creating versions of data systems and providing technological support for one of its complex computer programs.

The company believed the computer engineer exercised independent judgment through making recommendations to senior managers and the computer engineer believed he did not perform work that would qualify as exercising independent judgment through making such recommendations.

After the computer engineer complained to the company that he should not be exempt from the FLSA, an associate member of the company's legal team and a third-party consultant each said they considered the computer engineer to be properly exempt under the computer-professional exemption of the FLSA. The third-party consultant said the computer engineer also was exempt under the highly compensated employee exemption and the legal associate also viewed the employee as likely also able to be covered by the administrative exemption.

Despite the evaluations, the computer engineer sued the company so that he could be retroactively considered nonexempt from the FLSA and receive back wages.

ISSUE: Was the employee nonexempt from the FLSA's minimum wage and overtime requirements?

DECISION: The company was able to treat the computer engineer as exempt from the FLSA's minimum wage and overtime requirements, and he could be exempted from these requirements under the administrative, computer-professional and highly-compensated employee exemptions, a federal district court said.

An employer and employee disputed how much independent judgment was exercised.

No evidence existed to support the computer engineer's perspective that the nature of his job duties would cause him to not be exempt from the FLSA, the court said.

The highly compensated employee exemption applied because the computer engineer was paid at least $100,000 each year, performed nonmanual work and performed at least one of the duties of an exempt administrative or professional employee, the court said.

The computer engineer's job duties were directly related to the company's business operations because his work enabled the company's computer systems to properly function, the court said. These job duties, in conjunction with the computer engineer's frequent exercise of independent judgment regarding issues of significance, caused the administrative exemption to be applicable.

“The record is replete with instances where [the computer engineer] designed and implemented solutions and provided advice to upper-level management, helping to shape [the company's] purchasing decisions and policies,” the court said.

Independent judgment was among the traits of the computer engineer's job because he needed to evaluate systems and strategies and did so without specific directions from senior managers and without immediate supervision, the court said.

Even if the computer engineer did not exercise discretion or independent judgment regarding one of his responsibilities, “there is no requirement that every job duty performed by an administrative employee involve the exercise of discretion of independent judgment,” the court said.

As he was a computer engineer who developed software among other duties covered by the computer-professional exemption, that exemption was applicable, the court said.

His responsibilities for upgrading software and testing upgrades require “both a high level of skill in systems analysis and in-depth knowledge of both the software and [the company's] operating systems, and clearly establishes that [the computer engineer's] duties are exempt,” the court said (Mock v. Fed. Home Loan Mortg. Corp.,2014 BL 200246, E.D. Va., No. 1:13-cv-01292, 7/15/14).

POINTERS:The highly compensated employee and administrative exemptions can apply to an employee if in addition to the requirements the court identified in this case, the employee is paid at least $455 each week on a salaried basis.

Computer employees who are salaried can be exempt from the FLSA under the computer-professional exemption if they are paid at least $455 a week.

If computer employees are paid hourly, they must be paid at least $27.63 an hour to be exempt under the computer-professional exemption.

For more information, see PAG's “FLSA Exemptions” chapter.

This analysis illustrates how courts resolve pay-related disputes. The names and dialogue are fictitious.