Key Differences of Exempt and Non-Exempt Employment Status

On any given day at IT recruiting companies, conversations between IT candidates searching for new opportunities and IT recruiters matching those candidates with exciting job openings, will undoubtedly yield the topic of overtime pay. This in particular raises the question about the key differences of exempt and non-exempt employment status. Are candidates “Exempt” (not eligible for overtime pay) or “Non-Exempt” (eligible for overtime pay)? Whether the IT job seeker is pursuing a contract assignment through various IT staffing agencies Boston or exploring opportunities on a permanent placement basis, the topic remains equally relevant.

Given the nature of the information technology industry’s long and often unpredictable hours, it is understandable why exemption status is important to the IT professional. It is not uncommon for an high-tech professional to be required to work late into the evening or over the weekend resolving a critical issue or implementing new technologies to make a business more efficient and competitive. In today’s electronic age, time is money. As businesses increasingly rely on technology to survive, any down time could be potentially devastating resulting in the loss of hundreds of thousands or even millions of dollars.

In addition, many high-tech contractors would likely state that they can be more efficient during off-hours when a network is seeing minimal usage and they are not bombarded with requests from the end-user community.

Often times, those arduous nights and weekends go unnoticed by end-users who arrive to work each morning and are able to navigate their computers seamlessly. When the business community is oblivious to the endless issues that IT professionals resolve behind the scenes, then IT is typically successful at doing their job.

If questioned, the majority of technical consultants probably could not remember the last time they worked a standard 40 hour week. Given the choice, they would gladly opt for the non-exempt status thus reaping the financial benefits ofall of those extra hours worked.

Unfortunately, that decision does not fall upon the employee and is decided upon by the Fair Labor Standards Act (FLSA). According to the FLSA Exempt Employees and Non-exempt employees are classified as follows:

An FLSA Exempt employee is one who is not covered by the minimum wage and overtime provisions of the Fair Labor Standards Act.

While a salaried employee can be either exempt, or non-exempt, exempt employees are paid the same salary every week and are never entitled to overtime, regardless of how many hours they work per week.

An FLSA Non-Exempt employee is one who is covered by the minimum wage and overtime provisions of the Fair Labor Standards Act.

A non-exempt employee is entitled to overtime when he or she works greater than 40 hours during a week. However, the employee could also be paid less during weeks where he or she may work less than 40 hours.

The FLSA recognizes 5 classes of exempt employees and information technology has its own category, which is outlined below:

The Highly-Skilled Computer Software Employee Exemption

This exemption applies to computer systems analysts, computer programmers, software engineers or other similarly skilled workers in the computer field.  However, job titles don’t necessarily determine it.

FLSA Requirements:

Employee is compensated:

• On a “salary basis” at least $455 per week; or
• On a consultant “fee basis” at least $455 per week; or
• On an hourly basis at a rate not less than $27.63 per hour.

In addition to the compensation requirements above, the employee’s primary duties should consists of:

  • The application of systems analysis techniques and procedures,
    including consulting with users, to determine hardware, software
    or system functional specifications; or
  • The design, development, documentation, analysis, creation, testing
    or modification of computer systems or programs, including
    prototypes, based on and related to user or system design
    specifications; or
  • The design, documentation, testing, creation or modification of
    computer programs related to machine operating systems; or
  • A combination of the aforementioned duties, the performance of
    which requires the same level of skills.

Given the requirements, it is likely that many IT professionals will never be eligible for overtime given their income levels. While some may view this as a negative, the positive may be that those in the information technology profession are making a relatively substantial income compared to their counter-parts in many other industries. In addition, it is very evident from the high-tech candidates that interact with IT recruiters in Boston, many are extremely passionate about what they do and their compensation happens to be an added bonus to a career they
would likely pursue regardless of the income potential.

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AVID (Applications, Voice, Internet, Data) Technical Resources is a leading Information Technology recruiting company. Specializing in placing contract and permanent personnel in both Infrastructure Support and Applications Development positions, AVID has a national presence supporting clients ranging from small businesses to Fortune 100 companies. Headquartered in Boston, MA, AVID has achieved tremendous growth since the firm's inception in 2003. This has triggered numerous national awards and recognition, such as being named to Inc. 500 Magazine's list of 5,000 Fastest Growing Privately-held Companies in the US in 2010, 2011 and 2013. Additionally, the firm boasts of having more than 100 five-star reviews on Google from clients and candidates who rave about their experience and interaction with the firm's recruiters.