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Technology can transform exempt status

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in Human Resources,Overtime Labor Laws

As work becomes more technologically driven, employees are seeing their job responsibilities change.

Sometimes, technology makes the job easier as tasks become automated. Other times, the effect is the opposite, as technology forces the employee to make newer and tougher judgments.

Be alert: Technological advancements in a job can also change an em­­ployee’s status under the Fair Labor Standards Act (FLSA) from an exempt to a nonexempt worker—or vice versa.

That’s because some exemption classifications are based on the employee exerting “discretion and independent judgment” in the job.

If technology takes that aspect away from an exempt position, it could become a nonexempt, hourly job. Or, as in the following example, if a job becomes more technical over time, it could solidify its exempt status.

Recent case: Penny Verkuilen worked for a software company that sold increasingly specialized software for media companies. As the technology advanced, the job involved lots of ­in­­ter­­action with clients to develop sophisticated solutions.

The company had labeled her as a salaried, exempt employee under the FLSA’s administrative exemption. ­Reason: She used independent judgment to customize software offerings for her clients. But Verkuilen sued, claiming she should have been an hourly, nonexempt employee paid for hours over 40 per week.

The court sided with the company, saying the exempt classification was cor­rect because she was truly using dis­cre­tion and independent judgment to sell the customized software. As the court pointed out, she wasn’t selling packaged software at Best Buy. (Verkuilen v. Media­Bank, No. 10-3009, 7th Cir., 2011)

Bottom line: The more independence and flexibility employees have, the more likely they would be classified as ex­­­empt. The court noted that employees like Verkuilen work independently, and their employers typically don’t monitor hours worked.

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