May 15th, 2008
Should a $100,000-per-Year Worker Get OT?
I’ve spent way too much time in my management career debating the intricacies of a very dull but important topic—whether an employee is salaried and exempt or hourly and nonexempt, in the eyes of the law.
It’s a big deal for companies and HR people everywhere, of course, but the law is particularly tough to deal with out here in California (where the Workforce Management world headquarters is located), given some recent court decisions and an epidemic of wage and hour class-action lawsuits that get into the misclassification of employees as exempt.
Well, here’s another class-action lawsuit from the Left Coast, and this one involves a technical writer at Sun Microsystems who says she was denied overtime despite spending “more than 60 hours a week at her computer when the company was preparing a new product release,” according to a story in the San Jose Mercury News.
Here’s what caught my eye: “Sun’s technical writers may earn salaries of $100,000 a year, but they don’t get overtime pay for the extra hours, according to [technical writer Dani] Hoenemier’s attorney, who is challenging the company’s practice of treating Hoenemier and about 300 other writers as exempt from state labor laws governing overtime,” the Mercury News reports. If the company loses, it could owe “well over $20 million” in back pay, according to Hoenemier’s attorney, Aaron Kaufmann of Walnut Creek, California.
The issue here, according to the Mercury News story, is that “California enacted controversial legislation in 2000 that exempted ‘computer professionals’ such as software developers from rules requiring overtime for working more than 40 hours a week or eight hours a day.”
Federal wage and hour law has such an exemption as well. But in an interview with Workforce Management, Kaufmann said that when California adopted the federal standard, it specifically carved out technical writers from the exemption for computer professionals. (The thinking, perhaps, was that while writing can require some skill, it’s not on a par with computer programming.) According to the Mercury News, “Sun says the writers’ duties fall under provisions that exempt administrative, professional or computer professional workers.”
Defining who is an exempt employee can be a tricky business, especially here in California. And figuring out who should be eligible for overtime can also be problematic.
Getting this wrong can be an expensive lesson for a business to learn. I once worked at a company that claimed that everyone with a specific title was exempt and not eligible for overtime even though not a single person with that title came anywhere close to meeting the classic test for an exempt employee. It all unraveled when a disgruntled employee quit for a new job and called the California Division of Labor Standards Enforcement. The result? An investigation by the state of California that led to my former employer getting socked with a $100,000 fine.
There is a lot of controversy in Silicon Valley surrounding the legislation exempting computer professionals, especially since it goes against the grain to suggest that professionals making $100,000 a year should get OT to boot. My guess is that the lawsuit against Sun is just the tip of the iceberg on this issue, and that whatever happens out here will send ripples through wage and hour policies everywhere.
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