Are computer employees, highly compensated employees, or outside sales employees exempt from overtime pay?

The Fair Labor Standards Act, passed in 1938, requires employers to pay their employers one a half times their regular rate for any hours worked past 40 hours per week. However, this overtime rule does not apply to every employer and employee.

First, the FLSA only covers employees and not independent contractors. Under the FLSA, employees are those workers who are economically dependent on their employers. Second, the Act only covers employers who have workers that are engaged in or affecting interstate commerce. The interstate commerce requirement is interpreted very broadly and includes most workers.

Lastly, for an employee to receive protection from the FLSA and entitle him to overtime pay he must not be an exempt employee. The FLSA exempts employees who occupy certain positions. Among these exemptions are the computer employees exemption, the outside sales exemption, and the highly compensated employees exemption.

For the computer employee exemption to apply an employee be paid at least $913 per week as a salary or as an hourly employee, he must work as a computer systems analyst, computer programmer, software engineer, or other similar job in the computer field, and his primary duty must consist of applying systems analysis techniques and procedures, designing, developing, documenting, analyzing, creating, testing, or modifying computer systems or programs, including those programs related to machine operating systems.

An employee can have as his primary duty any combination of those duties to fall under the exemption. For example, an employee, employed as a computer programmer making at least $913 per week, primarily designs and develops a smartphone app at his job—he will likely be exempt from overtime.

However, the exemption does not apply to those employees who produce and manufacture computers or those who frequently use or are dependent upon computers in their jobs.

For the outside sales exemption to apply an employee’s primary duty must be making sales, and he must be customarily and regularly working away from the employer’s place or places of business. Notably, there is no salary requirement—an employee does not have make at least $913 per week to be exempt.

Making sales includes obtaining orders for products, contracts for services, or the use of facilities. However, outside sales does not include sales made by mail, telephone, or the Internet unless those communications are used only to supplement in-person visits. So, an employee who uses a fixed site as a headquarters for making sales calls does not fall under the outside sales exemption—he is not engaged away from the employer’s place of business.

On the other hand, for example, a pharmaceutical sales rep who goes from hospital to hospital, conducting sales at doctors’ offices, would be an exempt employee.

For this exemption to apply an employee must be paid a total annual compensation of at least $134,004 and must customarily and regularly perform one of the duties of an exempt executive, administrative, or professional employee.