Information Technology is one of the biggest industries for contract staffing companies, but it is also one of the most difficult to determine whether contractors working within it are entitled to overtime. Under the Fair Labor Standards Act (FLSA), most employees have to be paid at a rate of 1.5 times their regular pay rate for any hours worked over 40 in a work week, but certain “Computer-Related Occupations” are exempt from the overtime requirements. Before you decide that an IT Contractor is exempt from overtime, though, remember that the position has to pass a two-part test.
IT Contractor Duties
Simply working with a computer does not exempt someone from overtime pay. According to the FLSA, they must be employed as a computer systems analyst, computer programmer, software engineer, or another similarly skilled position. Workers who fall under this exemption work more in the “application of systems analysis techniques and procedures” and the “design, development, documentation, analysis, creation, testing, or modification or computer systems or programs.”
This exemption does not cover people who work on the manufacturing or repair of computer hardware or other equipment. It also does not include people, such as engineers and drafters, who depend on computers to do their jobs.
Compensation of IT Contractors
Even if the contractor meets all of the duty requirements of the Computer-Related Occupations Exemption, that contractor may still not be exempt from overtime depending on how he/she is paid. This exemption is a little different from the FLSA’s other exemptions in that it does allow for employees to be compensated on an hourly basis, but they must be paid at least $27.63 per hour.
As with the Professional Exemption we discussed in a previous blog post, the Department of Labor (DOL) has a Fact Sheet on the Computer-Related Occupations Exemption that provides more detail than we can here on the requirements of this exemption. We encourage you to use this Fact Sheet and consult with an employment attorney any time you are uncertain of how to classify a contract worker in a computer-related position.
This article is for informational purposes only and should not be considered legal advice.