*In
honor of the Fair Labor Standard Act’s 78th birthday and in light of the important
changes to the DOL overtime regulations going into effect December 1, 2016, the
Modern Workplace is running a special multipart series entitled “FLSA
Fundamentals.” The series has covered some basics of this important law and includes
a discussion of the DOL’s new regulations. This is the fourth post in that
series.*
As discussed in previous posts,
determining the proper FLSA classification of an employee can be taxing. In
addition to the “white collar” exemptions (e.g. Executive Employees, Administrative
Employees, and Learned Professionals)
discussed in a prior blog post
in our FLSA Fundamentals series, employers often apply (or rather misapply) two
other common exemptions to avoid overtime costs: Computer Employees and Outside
Sales Employees.
As with all FLSA exempt
classifications, an employee’s duties and pay, rather than job title, determine
whether the employee is, in fact, an exempt Computer Employee or Outside
Sales Employee. To qualify for the FLSA’s Computer Employee exemption, an employee must meet the following
test:
COMPUTER EMPLOYEE EXEMPTION
|
|
Pay
|
|
Duties
|
Employed as a computer systems analyst, computer
programmer, software engineer or other similarly skilled worker in the
computer field whose primary duty (generally
>50% of time) is performing:
|
In our age of ubiquitous computers
and increasingly prevalent technology, most employees have a basic fluency with
computer technology and many employees perform a large portion of their job
duties on computers. As a result, employers often improperly classify employees
under the computer exemption. As noted above, the computer employee exemption
requires that the employee’s primary duty be higher-level computer work, such
as systems analysis or designing computer systems and software programs, rather
than troubleshooting remote access issues and answering basic call-center
questions. As an example, while R2-D2 would technically be a “computer
employee,” it would not qualify for the computer employee exemption because its
electronic repair duties do not rise to the requisite level required by the
FLSA.
An employee will qualify for the FLSA’s
Outside Sales Employee exemption by
meeting the following test:
OUTSIDE SALES EMPLOYEE EXEMPTION
|
|
Pay
|
No salary requirement
|
Duties
|
1. Primary
duty (generally >50% of time) is:
2. Employee must be customarily and regularly engaged away from the employer’s place(s) of business |
A key component of the outside sales
exemption is that the employee must actually have a primary duty of sell outside of and away from the employer’s office; simply making sales by
telephone, no matter how long distance, is insufficient. Employees may still
qualify for the exemption if they do minor amounts of incidental work in the
employer’s office. However, it is not enough that the employee is physically
working outside the employer’s office. An employee who offices at home but does
not regularly travel away from that work site to make sales is not an outside
salesperson. An employee must be regularly away from his or her home base
office and selling products, such as at customer locations and trade shows. Think
Willy Loman, the traveling salesmen from Death
of a Salesman, not Chris Gardner the cold-calling medical devices salesmen
from Pursuit of Happyness.
NOT
As explained more fully in our previous posts, employers
must carefully analyze and revisit positions classified as exempt because the
costs of FLSA misclassification can be significant. Employers must be cognizant
of employee drift — an employee’s
primary duties may qualify for an exemption when they first start working, but
that employee may no longer qualify for the exemption if their primary duties drift
or are reassigned during their employment. Employers should regularly revisit
their employee classifications to ensure FLSA compliance.
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