Overtime Exempt Status: Don't Forget About State Law (Especially When Dealing With Computer Employees)
Most Pennsylvania employers and their counsel are familiar with the overtime compensation requirements and the exemptions from these requirements established by the federal Fair Labor Standards Act ("FLSA"). The exemptions, such as the bona fide executive, professional, and administrative employee exemptions, define when employers may lawfully treat certain employees as exempt from the FLSA's overtime compensation requirements.
Fewer Pennsylvania employers are aware that the Pennsylvania Minimum Wage Act of 1968 ("PMWA"), a state law, also creates a statutory right to overtime compensation and, like the FLSA, includes exemptions to these requirements. At one time, the state overtime requirements and exemptions generally mirrored the FLSA. More recently, however, the federal and state rules on overtime compensation and exempt status have diverged in numerous areas. Compliance with the FLSA requirements no longer ensures compliance with the state PMWA.
For example, the federal Small Business Job Protection Act of 1996 codified prior U.S. Department of Labor interpretations and included an exemption for computer employees. To qualify for the computer professional exemption, the employee must be employed as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field and must have a primary duty of
(a) the application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications;
(b) 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;
(c) the design, documentation, testing, creation, or modification of computer programs related to machine operating systems; or
(d) a combination of the aforementioned duties, the performance of which requires the same level of skills.
The PMWA and its regulations contain no companion to the federal computer professional exemption. Thus, an otherwise exempt computer professional still may be entitled to overtime compensation under the state law. If an employer has a computer professional that meets the federal exemption, the employer should examine whether the employee also qualifies for another white-collar exemption, such as the administrative or professional exemption, that also is recognized by state law. However, Pennsylvania’s white-collar exemptions require that the exempt employee be paid on a Salary Basis; while the federal computer employee exemption allows for payment on an hourly basis if the rate exceeds $27.63 per hour. If the employee in question would not qualify for any other exemption, the employer may be liable for unpaid overtime compensation under the PMWA.Please note that, even under federal law, "help desk" employees often do not meet the computer professional exemption or any of the other white-collar overtime exemptions