Commentary | Unions and Labor Standards

Misguided CPU Act would cut tech workers’ wages

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Corporate lobbyists have begun an intense campaign on Capitol Hill to cut the earnings of workers who use computers for a living. Sadly, a couple of Democrats who ought to know better have joined this campaign, which is focused on making sure computer systems analysts, computer programmers, software engineers, and other “techies” don’t qualify for overtime pay. Democratic Senators Kay Hagan of North Carolina and Michael Bennet of Colorado have, along with four Republican co-sponsors, introduced the cleverly named CPU (Computer Professionals Update) Act. It is premised on the notion that labor law governing the pay of IT professionals hasn’t kept pace with the changing economy. While labor law regarding IT pay should be updated, it should be updated in a way that increases workers’ pay, instead of cutting it, as would the CPU Act.

Unless a particular exemption applies, the Fair Labor Standards Act requires that every worker be paid time-and-a-half for overtime hours—any hours worked beyond 40 in a week. Under current law, employers can deny overtime pay to computer “professionals” who earn a salary of at least $455 per week or, if paid hourly, at least $27.63 an hour. The CPU Act would expand the definition of workers who do not qualify for overtime pay to include lower-skilled workers.

As an example, consider the circumstances of a male computer systems analyst who earns a salary of $455 per week and works 60 hours every week, for hourly wages amounting to just $7.58. The way the law stands today, if his primary duty is testing or modifying computer programs—i.e., if the law considers him a computer “professional”—then his employer may legally deny him overtime pay.

I was the legislative director for a senior member of the House committee that drafted the exemption from overtime regulations, which was enacted during the George H.W. Bush administration. The original rationale was that the exemption would apply only to highly skilled workers who had so much authority that they could essentially control their own hours. At the time, it was understood that it would apply only to the very top experts in computer software—i.e., the ones who actually write the software programs, or who design, implement, and maintain a company’s network software, intranet, or Internet presence.

Does this exemption from overtime pay protection for computer professionals need updating, as proponents of the CPU Act claim? The so-called duties tests probably don’t need updating—the exemption should still apply only to the employees with the greatest skills and responsibility. However, the income thresholds surely need to be updated. It should be clear to anyone that an employee paid a near-poverty level salary of as little as $455 per week is probably not a highly skilled professional, does not have much respect from his or her employer, does not have the authority and responsibility of a professional, and does not control his or her own time. Therefore, he or she should not be exempted from overtime pay protection.

It’s easy to see why employers want to expand this exemption beyond the very skilled employees to which it is limited today: Cheaper labor can mean bigger profits. But their stated rationale is the failure of the law to keep up with changes in the economy. In part, they’re right that the law hasn’t kept up with the times: Since the exemption was enacted 22 years ago, inflation has reduced the purchasing power of the exemption threshold wage by almost 50 percent, and both the salary and hourly pay thresholds should be increased to take that inflation into account. The minimum hourly rate for exemption should be $45.631, and the weekly salary minimum should be at least 40 times that amount—$1,825 per week.

Another rationale proffered for the CPU Act is the need to “clarify” the exemption, with the goal of ending unnecessary litigation. Here’s the text of the bill:

SEC. 2. AMENDMENT TO THE FAIR LABOR STANDARDS ACT OF 1938.

Section 13(a)(17) of the Fair Labor Standards Act of 1938 (29 U.S.C. 213(a)(17)) is amended to read as follows:

`(17) any employee working in a computer or information technology occupation (including, but not limited to, work related to computers, information systems, components, networks, software, hardware, databases, security, internet, intranet, or websites) as an analyst, programmer, engineer, designer, developer, administrator, or other similarly skilled worker, whose primary duty is–

`(A) the application of systems, network or database analysis techniques and procedures, including consulting with users, to determine or modify hardware, software, network, database, or system functional specifications;

`(B) the design, development, documentation, analysis, creation, testing, securing, configuration, integration, debugging, modification of computer or information technology, or enabling continuity of systems and applications;

`(C) directing the work of individuals performing duties described in subparagraph (A) or (B), including training such individuals or leading teams performing such duties; or

`(D) a combination of duties described in subparagraphs (A), (B), and (C), the performance of which requires the same level of skill;

who is compensated at an hourly rate of not less than $27.63 an hour or who is paid on a salary basis at a salary level as set forth by the Department of Labor in part 541 of title 29, Code of Federal Regulations. An employee described in this paragraph shall be considered an employee in a professional capacity pursuant to paragraph (1).’

Does that help make things clear for you? If not, then the Congressional Research Service summary might help:

“Computer Professionals Update Act or CPU Act – Amends the Fair Labor Standards Act of 1938 to revise and expand the exemption from overtime and minimum wage requirements for any employee who is an analyst, computer programmer, software engineer, or other skilled worker.

Extends the exemption to any employee working broadly in a computer or information technology (IT) occupation, including but not limited to work related to computers, information systems, components, networks, software, hardware, databases, security, the Internet, intranet, or websites. Adds to the current occupations cited designer, developer, and administrator.

Applies such exemption to IT professionals: (1) whose primary duties include, among other things, network or database analysis, consulting with users, and directing the work or training of individuals performing such duties; and (2) who are paid at a rate of at least $27.63 an hour (as under current law) or on a salary basis. (Effectively, eliminates overtime pay for all IT professionals.)”

As it turns out, the only purpose of the proposed legislation is to deny overtime pay to a broader class of people than the original exemption permits.

High-tech workers need overtime protection as much as any other workers, based on the facts reported in numerous class-action lawsuits. As the Cleveland Plain Dealer reports, even with overtime pay, high-tech employees find themselves working 90-hour weeks and feeling like indentured servants. It’s hard to have a life if your employer can order you to work 90 hours a week, and it makes me think about the job creation possibilities of having two employees each work 45 hours a week rather than one working 90 hours.

So yes, Congress should update the computer professional exemption—but unlike the CPU Act, it should do so in a way that increases employees’ pay, rather than cutting it.

Endnotes

1. Theoretically, the threshold should be $47.12 per hour, 6.5 times the current minimum wage of $7.25 an hour. When the exemption was first enacted, the threshold was set at 6.5 times the minimum wage. The Republican Congress that passed a minimum-wage increase in 1995 froze the threshold at its 1991 level: 6.5 times the $4.25 per hour minimum, equal to $27.63 an hour.


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