NEW SECTION  

WAC 296-128-535  Are professional computer employees exempt from the Washington Minimum Wage Act? (1) Any employee who is a computer system analyst, computer programmer, software engineer, software developer or other similarly skilled worker will be considered a "professional employee" and will be exempt from the minimum wage and overtime provisions of the Washington Minimum Wage Act if:

(a) Their primary duty is of one of the following:

(i) Applying systems analysis techniques and procedures to determine hardware, software, or system functional specifications for any user of such services; or

(ii) Following user or system design specifications to design, develop, document, analyze, create, test or modify any computer system, application or program, including prototypes; or

(iii) Designing, documenting, testing, creating or modifying computer systems, applications or programs for machine operation systems; or

(iv) Any combination of the above primary duties whose performance requires the same skill level; and

(b) Their rate of pay is at least $27.63 per hour.

(2) This professional exemption only applies to highly skilled employees who:

(a) Possess a high degree of theoretical knowledge and understanding of computer system analysis, programming and software engineering; and

(b) Have the ability to practically apply that theoretical knowledge and understanding to highly specialized computer fields; and

(c) Generally attain the necessary level of expertise and skill to qualify for an exemption through a combination of education and experience in the field; and

(d) Consistently exercise discretion and judgment in the application of their special knowledge as opposed to performing purely mechanical or routine tasks; and

(e) Engage in work that is predominantly intellectual and inherently varied in character as opposed to work that is routinely mental, manual, mechanical, or physical.

(3) While many employees who qualify for this exemption hold a bachelor's or higher degree, no degree is required for this exemption.

(4) This professional exemption does not apply to:

(a) Trainees or employees in entry level positions learning to become proficient in computer systems analysis, programming and software engineering; or

(b) Employees in computer systems analysis, programming and software engineering positions who have not attained a level of skill and expertise which allows them to generally work independently and without close supervision; or

(c) Employees engaged in the operation of computers; or

(d) Employees engaged in the manufacture, repair or maintenance of computer hardware and related equipment; or

(e) Employees covered by a collective bargaining agreement.

Overtime and Minimum Wage Exemption for Professional Computer Employees
Public Hearing Date: November 25, 1997
CR-103 Filing Date: December 31, 199

A public hearing on the proposed new rule section, WAC 296-128-535, Are Professional Computer Employees Exempt from the Washington Minimum Wage Act?, was held on November 25, 1997, in the auditorium of the Department of Labor & Industries building in Tumwater, WA. The following is a summary of those public hearing comments and the Department's response to them:

NEW SECTION: WAC 296-128-535, Are Professional Computer Employees Exempt from the Washington Minimum Wage Act?

Reason for Adopting Rule: State-initiated amendments are adopted which create a new section written according to clear rule writing guidelines and incorporate current Federal Fair Labor Standards Act overtime and minimum wage exemptions for computer software professionals into Chapter 296-128 WAC.

 Comments Received Relating to this Section: 

I'm here to express my strong support for the computer professional exemption. I am the president and owner of a small company employing 120 people. All of my employees are either hourly or salaried. I have three points that I would like to make:

• This exemption only applies to people who are making $27 an hour or more.

• I am hoping that state regulations will come into compliance with federal regulations on this issue.

• My company has lived within the laws as they exist in this state. It pays time and a half to all employees who work over 40 hours in a week.

The last point has created problems for my governmental entity clients who will not pay time and a half if the employees working on their job works more than forty hours in a week. It has created problems for my employees by reducing their ability to work more flexible schedules and, consequently causing them to either complain or lie about their work schedule. And it has caused problems for me because I get caught between the client and the employee. I figure if we have a regulation so disliked by the people working for you, we'd be better off if we could make it consistent with federal law and avoid these problems entirely.

I want to thank Director Gary Moore and the Department of Labor & Industries for bringing this up and proposing these changes which will make it easier for small businesses in the state of Washington.

Department Response to Comment(s): Comment requires no change.

Comments Received Relating to this Section:

I am here representing the International Federation of Professional and Technical Engineers, and I also have authorization to represent Seattle Professional Engineering Employees Association, SPEEA. On behalf of the two organizations, we want to express our strong support for the rules as proposed. We have particular interest in the maintenance of No. (4)(e), the exemption for employees covered by collective bargaining agreements. Our support for the proposed rule changes is contingent upon that section remaining intact.

Department Response to Comment(s): Comment requires no change.

Comments Received Relating to this Section: 

I am with the Association of Washington Business. I speak in strong support for the new rule section, WAC 296-128-535. The first speaker very adequately summarize why this change is important and why it is needed in Washington State. I would simply add that most professional employees in Washington State are exempt from the minimum wage and overtime laws. This rule proposal adds one more very appropriate exemption to that particular bloc and treats them as all other professional employees are treated, i.e. exempts them from the minimum wage and overtime laws.

Department Response to Comment(s): Comment requires no change.

Comments Received Relating to this Section:

I am representing the Washington Software and Digital Media Alliance, the trade association representing the software companies in the state of Washington. I support the proposed rule and think that the first speaker summarized the arguments supporting it's adoption. I won't take time repeating those remarks. I would like to express the associations gratitude for the Department, in particular, Greg Mowat, Ernie LaPalm, Mike Watson, and Gary Moore, for working with us on this, and we urge your quick action.

Department Response to Comment(s): Comment requires no change.

Comments Received Relating to this Section:

I am the owner and president of a Washington State company employing 142 people of which 120 are consultants. I strongly support the change to WAC 296-128-535 and bringing this law into compliance with the Federal Fair Labor Act. Our average hourly rate is $48.61, therefore, $27 is not the issue for me. I appreciate your time in considering this and look forward to your actions.

Department Response to Comment(s): Comment requires no change.

Comments Received Relating to this Section:

I am with a software provider in this state. I would just like to reemphasize what the previous speakers said, that the main thrust of this is bringing it into compliance with existing federal regulations and only applies to very highly-skilled professional employees making in excess of $57,000 a year. This rule change was the product of over a year of meetings which involved all parties and interests. It was a very open process. Member of the labor community were involved and we thank them for their participation. And we provided for a collective bargaining exemption, so I think it is a very fair proposal. And I would like to thank and compliment the Department of Labor for their efforts in this regard.

Department Response to Comment(s): Comment requires no change.

COMMENTS RECEIVED DURING EXTENDED COMMENT PERIOD

Following the November 25, 1997, public hearing in Tumwater, an article critical of the proposed rule and the Department's adoption process appeared in the Seattle Times (12-5-97). This prompted stakeholder requests to either hold a second public hearing or extend the original public hearing comment period. The Department chose to extend the original comment period until December 19, 1997. As a result, over 750 e-mail, fax and letter responses were received by the Department. The responses were mixed and the Department has selected the following as representative of the total:

Comments Received Relating to this Section:

I've worked as a computer systems professional all of my adult life. I have never done anything else. In recent years, I have had the opportunity to contract for several major companies (the largest and most well-known) in the area. My one, single, only protection against abuse, exploitation and professional burnout is overtime pay.

Working alongside full-time employees, we are expected to keep pace. We are expected to work as hard, as long, as dedicated and as sharp as anyone else. We often have to ignore our feelings of resentment that we are considered expendable and disposable, while our full-time counterparts enjoy comfortable, secure workforce positions with large powerful companies who care about their well-being and professional futures. And yet, we ourselves do exceptional work which usually exceeds the high-level hiring criteria for our job descriptions.

In 1997, I did not get paid for a single federal holiday. I did not receive vacation pay, sick pay, life insurance, health insurance or company-sponsored professional education to keep me employable. I worked long, hard hours not because I was excited about my future with the company, but because I had a sense of duty to perform well. My only protection against routine 90-hour workweeks was my overtime rate; in some cases it meant the difference between going home at all some nights.

Overtime is my protection against overwork, and my reward for working hard. Even at a higher hourly rate, my pay does not remotely match the typical benefit package a company would be paying on my behalf for paid holidays, sick leave, vacation time, health insurance, professional education and stock options. It is still infinitely cheaper to pay me overtime than give me all of that, and overtime pay only partially buffers me for time lost due to illness, unpaid holidays or other noncovered basics.

In a typical year at a typical company, there are paid holidays, paid sick leave, paid vacation, medical insurance, disability insurance, retirement plans and incentives for performance. In my typical year, I receive only overtime pay.

If the overtime pay laws are revised to exclude me, I will no longer work added hours. Companies will be required to recruit and train other professionals to work the hours I will no longer work, at 100% of my hourly rate, instead of the 50% hourly increase I would receive. Maybe they will find people willing to work 90 hours a week with no benefits and no overtime pay, but it won't be me working under those conditions. My full-time counterparts are entitled to overtime compensation in addition to full employee benefits. Why am I, with no benefits at all, not at least entitled to overtime pay for overtime work?

We are already exploited and worked to extreme limits; denying overtime pay for overtime work would lead us into a modern factory sweatshop, something that the Department of Labor & Industries is by law required to protect its workers from suffering.

Department Response to Comment(s):

In response to the comments received opposing the proposed rule and criticizing the Department's rule adoption process as "quiet" and "closed," the Department would offer the following points:

• The impetus for the proposed rule was a petition from the Washington Software & Digital Media Alliance (11-18-96) requesting an amendment to chapter 296-128 WAC which would incorporate current Federal Fair Labor Standards Act language exempting computer software professionals from overtime and minimum wage regulations.

• The Department surveyed major stakeholders and met with business and labor representatives (see attached stakeholder list) before deciding to amend chapter 296-128 WAC by incorporating the requested federal exemption.

• The Department informed the business and labor representatives helping develop the rule language that it would follow the rule adoption process in the Administrative Procedures Act.

• Adhering to that process, a notice of intent to amend the chapter (CR-101) was filed (9-3-97) with the Code Reviser's Office and subsequently published in the Washington State Register. Later, the proposed rule language and a notice of a public hearing (CR-102) was filed (10-22-97) with the Code Reviser's Office and subsequently published in the Washington State Register.

• In keeping with the requirements of the Administrative Procedures Act, the spirit of regulatory reform and Governor Locke's Executive Order 97-02, a press release announcing the proposed rule amendment and the pending public hearing was faxed (10-24-97) to 260 newspapers in the state.

A public hearing was held in Tumwater (11-25-97) and the public comment period was extended until December 19, 1997.

In response to the comments received opposing the proposed rule and questioning the Department's motives for proposing this specific rule amendment, the Department would offer the following points:

• The Department responded to a legitimate industry request for a type of rule amendment which has been adopted in a number of other states.

• Once the process of developing an amendment consistent with federal law began, the Department maintained close communication with business and labor representatives. It also distributed fact sheets outlining the rule to stakeholders to insure that the proposed rule met the intent of the industry petition.

• The amendment simply incorporates current Fair Labor Standards Act language into chapter 296-128 WAC in an effort to be consistent with federal law and reduce confusion in the State's computer industry.

• By this amendment, the Department does not interfere with the contractual relationships that exist between employer and employee. The amendment does not prohibit the payment of time-and-a-half for overtime, it relieves employers of the duty to pay overtime to highly skilled, highly paid computer professionals.

• The amendment does not interfere with the right of the employer and employee to contract regarding wages, hours and conditions of employment.

Comments Received Relating to this Section:

I am a computer professional, paid on an hourly basis, earning more than $27.63 per hour. I support the Department of Labor & Industries' proposal to coordinate State WAC's with FLSA guidelines. I currently set my own schedule as to hours worked in accordance with the needs of my employer's customer. I like that. I work a lot of overtime, between 600 and 1000 hours per year. I believe that if my employer is forced to pay me time and 1/2 for my overtime hours that I will be restricted to a 40 hour work week. Enforcing the current law will cost me personally between $30,000 and $40,000 per year. Please incorporate the FLSA guidelines into State law.

Department Response to Comment(s): Comment requires no change.

Comments Received Relating to this Section:

I am sending this e-mail to you in support of the proposed change to WAC 296-128-535 making computer professionals exempt from the Washington Minimum Wage Act. As a computer professional, I feel that this exemption allows me the freedom to perform my duties in a professional manner, free of management restraints that would restrict me to working only within the limits of a 40 hour week, which would stifle my creativity and limit my ability to do my job to my fullest potential.

Department Response to Comment(s): Comment requires no change.

Changes to the Rule (Proposed rule versus rule actually adopted): Rule adopted as proposed.