The Ninth Circuit’s Guidelines on California’s Administrative Exemption for IT Professionals.

Posted on June 29, 2012 | 1 comment

The Ninth Circuit’s Guidelines on California’s Administrative Exemption for IT Professionals.

Classifying computer professionals for purposes of overtime exemption can be a daunting task even for the most experience employment law attorneys. This task requires a thorough understanding of a complex interplay of Federal and California law, comprehensive knowledge of various white color exemptions (i.e. computer professional, administrative, executive, and skilled professional) and an intense factual analysis of employee’s job functions.

In early June 2012, in its unpublished opinion Heffelfinger v. Electronic Data Systems Corporation, the U.S. Court of Appeals for the Ninth Circuit provided employers with valuable guidelines on when it is proper to classify a computer professional as an exempt employee under California’s administrative exemption. In Heffelfinger, three IT professionals and other IT worker class members contended that they were not administrative exempt employees under Cal. Code Regs. Title 8, § 11040(1)(A)(2).

DECISION

It is interesting that right off the bat, the court noted that the 2004 FLSA regulations should not be used in interpreting California’s administrative exemption. The California administrative exemption expressly incorporates FLSA regulations effective as of 2001, (see Cal. Code Regs. Title  8, § 11040(1)(A)(2)(f)). But California’s Industrial Welfare Commission (“IWC”) has clarified, with respect to Wage Order 4-2001, that “only those federal regulations specifically cited in its wage orders, and in effect at the time of promulgation of these wage orders, apply in defining exempt duties under California law.”

When it comes to administrative exemption there are usually two most litigated issues: (1) whether employee’s work related to management policies or general business operations and (2) whether the employee exercised discretion and independent judgment over significant matters. Therefore, in reviewing this decision, I will focus my attention on these two issues.

Plaintiffs David Heffelfinger is an administrative employee.

Work directly related to management policies or general business operations 

The court held that Plaintiffs David Heffelfinger was an administrative exempt employee and the following functions indicated that Plaintiff’s work was related to management policies or general business operations:

    • installing, maintaining, and managing a personnel records management database for the Department of Defense (“DOD”) (qualifies as “servicing a business”);
    • executing or carrying out ( 29 C.F.R. § 541.205(c))  DOD database policies by “developing and enforcing data base standards and procedures,” “leading or participating in logical and physical data base design;”
    • reviewing system and programming designs to ensure efficient use of data base resources;
    • “monitoring data base performance statistics and recommending improvements, advising systems engineers and updating management on data base concepts and techniques, and
    • researching new data base technologies.

Customarily and regularly exercised discretion and independent judgment 

The court analogously found that Plaintiff exercised his discretion because he performed the following functions:

    • Distributed assignments among team members, monitored projects, and resolved disputes;
    • had the authority to recommend courses of action for achieving client specifications.

Plaintiff Andrew Hinds is an administrative employee.

Work  directly related to management policies or general business operations 

The court held that Plaintiff Andrew Hinds was also an administrative exempt employee and the following functions indicated that Plaintiff’s work was related to management policies or general business operations:

    • maintaining and managing the DOC’s personnel records management database and therefore performed (qualifies as “servicing a business”);
    • high-level problem-solving and for implementing specialized tools with respect to the Oracle data base;
    • providing  solutions to the DOD’s technical issues, which included leading and coordinating operational support and implementation activities for the DOD’s database administration.”

Customarily and regularly exercised discretion and independent judgment

    • responsible for keeping the DOD’s personnel records management database “up and running;”
    • served as “point man” with respect the DOD’s common access card system;”
    • analyzed production problems, participated in “subsystem design” and “major system upgrades,” and
    • worked “[u]nder minimal direction  to provide programming and technical leadership in support of customer needs.”

 Plaintiff Rodney Dwyre is not an administrative employee.

With respect to the third computer professional who worked as a systems engineer and information analyst, the court found that   a reasonable juror could find that Dwyre was not primarily engaged in “qualitatively” administrative work. In its conclusion, the court relied on the following findings:

    • duties primarily consisted of computer programming of business applications;
    • less than 50% his time  was assigning and coordinating work, determining schedules, reviewing assignments, and running team meetings;
    • created or modified  computer programs to meet customer’s  business requirements; and
    • primarily engaged in 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 and/or the application of systems analysis techniques and procedures, including consulting with users, to determine software or system functional specifications.
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1 Comment

  1. I am working with a client to determine proper classification of some of their IT positions. The company is a credit agency, not a high-tech company in the computer field. They have some systems engineers and application engineers (software) in their IT department who design, develop, program, etc. in-house systems and applications for internal use. The California Computer Professional exemption states that an employee in the computer software field shall be exempt if certain criteria apply. Do the employees have to be performing strictly software-related duties? And does the company itself have to be in the ‘computer software field?’ Thank you!

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