Fair Labor Standards Act: Six Things Tech Workers Need to Know

The class-action lawsuit that a former Apple network engineer filed last Monday has put tech workers’ relationship with the Fair Labor Standards Act (FLSA) into the spotlight. Many IT pros are watching the case with interest since it boils down to a pocketbook issue: compensation for overtime.

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At issue: are networking professionals—network engineers, network administrators and network support staff—covered by the FLSA? The plaintiffs contend that Apple misclassified them as exempt from the FLSA so that the company would not have to pay them for overtime. Apple will have to prove that these workers are in fact exempt by demonstrating that their jobs require independent judgment and discretion, and that they’re not simply carrying out repeatable tasks, says Jahan Sagafi, a partner with Lieff Cabraser Heimann & Bernstein, the law firm that represented IBM workers in their class action lawsuit against Big Blue in 2006. (The case was settled for $65 million in 2007. It was the biggest settlement of such a suit to date.) [Editor’s Note: A previous version of this story incorrectly stated that the case was settled in 2006.]

It’s not uncommon for employers to err on the side of classifying employees as exempt, says Sagafi, who worked on the IBM suit. In fact, the dirty little secret among employers and HR departments is that classifying employees as exempt—even if it means breaking the law—is in their best interest provided, of course, that they don’t get caught, says Sagafi:

“In a sense, they may see it as economically viable for them to skirt the law and wait to see if they get sued because the exposure is not that huge [if they don’t get sued],” Sagafi says. “If they can settle [a complaint] for less than 100 percent of what they owe people [for overtime], they’ve gotten away with a good deal.”

White collar workers like IT professionals can make sure they’re not being cheated out of overtime pay if they smarten up about the FLSA. If you work in IT, here’s what you need to know about the Federal Fair Labor Standards Act to make sure you get the compensation and treatment that you deserve under the law.

1. The FLSA is a weak law.

The U.S. Department of Labor doesn’t have the resources to enforce the FLSA, so it leaves compliance up to employers, says Sagafi. Classifying employees properly is the employer’s responsibility. As a result, it doesn’t always happen, and the only time employers’ actions get tested is when an employee files a complaint with the Labor Department, a state agency, or an attorney.

2. Employers have little incentive to classify salaried employees properly.

Since employers know the law isn’t highly enforced, they may be tempted to err on the side of classifying white collar workers as exempt so that they don’t have to follow the FLSA’s requirements, says Sagafi.

“The advantage to a company of classifying somebody as exempt is that the company can make the employee work as much as it wants, and the employee’s only remedy is to ask for more money, quit or sue for back wages,” says the attorney.

3. There are five different kinds of exemptions.

The five different kinds of exemption from the FLSA are the administrative exemption, the computer professionals exemption, the executive exemption, the professional exemption and the highly compensated exemption.

The professionals who fall into any one of those five exemptions are not covered by the FLSA. (To be exempt from the FLSA means that you’re not covered by that law. To be nonexempt means that you are covered by the law and therefore are eligible for overtime pay and for other protections.)

The administrative exemption is the most complicated, says Sagafi. “It hinges on whether the employee ‘exercises independent judgment and discretion with respect to matters of significance’ for the company,” he says, quoting the law. In other words, if a professional exercises his or her own judgment, creativity, vision, leadership and autonomy in performing his or her job duties in a core area of the business, he or she is likely to be exempt under the administrative exemption.

“If you don’t exercise independent judgment, if you perform rote, repetitive tasks in accordance with guidelines, protocols, checklists or established procedures, you’re not likely to be exempt under the administrative exemption because you’re not exercising discretion. You’re just following the rules,” adds Sagafi.

The computer professionals exemption mainly applies to computer systems analysts, computer programmers, software engineers and software developers whose primary duties consist of some combination of design, development, documentation, analysis, creation, testing or modification of computer systems and programs, and who earn at least $455 per week on a salaried basis. It does not pertain to help desk workers or to employees involved in the manufacture or repair of computer hardware.

The executive exemption pertains to employees involved in managing the entire company or a department or division of the company, who manage at least two people, have the authority to hire, fire and promote employees, and who earn at least $455 per week on a salaried basis.

The professional exemption applies to “learned” professionals (e.g. doctors and lawyers) and to creative professionals (e.g. graphic designers, copy writers.) Finally, if you earn $100,00 a year or more, you’re exempt from the FLSA under the highly compensated exemption.

Sagafi says that Apple will have to prove that network engineers fall into either the administrative exemption or the computer professionals exemption in order to counter the plaintiffs’ claim that they should have received overtime.

4. Your title is irrelevant legally.

Sagafi notes that the job title of “network engineer,” which is at issue in the Apple case, is irrelevant when it comes to determining whether or not an employee is exempt from the FLSA, since job titles can be overblown.

“Companies like to give fancy titles to employees because it’s a costless way for them to make their employees feel valued, and it has a corollary benefit of making employees sound like they fit an exemption if the employer has an eye to getting sued,” says Sagafi.

5. What matters is how you perform your work.

Sagafi acknowledges that IT professionals are highly skilled and possess specialized knowledge, but he says, that has little bearing on whether or not they fall into an exemption.

“What matters is whether they have autonomy and discretion,” he says. “We’ve found in these cases that there are established protocols and pathways and instructions and guidelines and ways of doing things that they have to follow time and time again.”

Sagafi points to the work IT professionals have to do to update virus protection software or to diagnose problems with routers as examples of rote, repeatable tasks that don’t involve a lot of personal judgment. “You get an alert from a third party software vendor, and you know what the steps are [to install those updates] because you did it last week. There’s a right way to do it and not a lot of choice in the matter,” he says. “Or, if there’s an error showing up on the monitoring software with respect to a router, you know you have to check 11 different aspects of the router and when you find the thing that is wrong with the router, you fix it, and there’s only one fix and there’s not much choice in the matter.”

6. If you’re going to sue, file a class action suit.

It’s hard for individuals and small groups to win these kinds of overtime cases, Sagafi says, because the FLSA is so complicated and because it consequently takes so much time and money for the attorneys to prove the employer’s liability. A class action suit, he says, gives the plaintiffs the strength in numbers and the lawyers the economies of scale that they need to prove their case.