Hundreds of thousands of computer analysts, programmers and software engineers will no longer be eligible to receive overtime payments under new regulations to be issued early next month by the Labor Department.
The exemption that excludes these workers from receiving overtime was approved by Congress late last year and represents the first time in the 52-year history of federal wage-hour law that anyone has become exempt from overtime payment simply by the level of their earnings in a specific occupation.
Until now, exemptions from the wage-hour law have been limited to certain professionals who met educational and licensing requirements or had specific managerial duties.
Under the new law, anyone working as a computer systems analyst, programmer, software engineer and "other similarly skilled professional workers" paid on an hourly basis can be denied overtime payments if they earn 6 1/2 times the federal minimum wage. The minimum wage will rise to $4.25 an hour on April 1. This means anyone earning $27.62 an hour in the covered occupations would not be eligible for overtime.
The most immediate impact will be in the computer consulting industry where hourly wages for programmers and analysts range from $25 to $100 an hour, according to Harvey Shulman, general counsel fo the National Association of Computer Consultant Businesses. It was not immediately clear just how many computer workers would be affected by the change, however.
The latest government statistics from the Labor Department's Bureau of Labor Statistics show approximately 1 million workers employed as computer programmers and analysts in all American industries in 1988, the latest figures available, with employment in the two categories growing more than 10 percent a year.
Shulman estimates that there are approximately 500,000 employees in the United States that fit within the category outlined in the new law and currently work on an hourly basis.
John Fraser of the Labor Department's Wage and Hour Division said that, in drafting the regulations, his office has not seen any numbers on how many workers would be covered by the new exemption.
Until four years ago, overtime was not an issue for most programmers and analysts. Many worked for small companies that contracted out their services to larger corporations that used them for specific jobs, working long hours for relatively short periods of time. These specialists were treated as independent contractors and, therefore, were exempt from federal wage laws that could have required they be paid overtime.
That all changed with the 1986 tax act. Under the new law, Congress said these computer specialists were employees and not contractors and, therefore, they had to be paid overtime if they worked more than eight hours a day or 40 hours a week.
When industry officials went to the Labor Department to seek an exemption, they were told that programmers and analysts had to be paid overtime because they did not meet the test for professionals.
Faced with suddenly having to pay time and a half for highly paid technicians, employers in the industry turned to Congress for relief. An effort to attach an amendment to the 1988 minimum wage bill failed at the last minute. But last year the industry managed to get management and labor to sign off on the exemption as an amendment to the American Samoa minimum wage bill, the only legislative vehicle available.
Shulman said that when the law was changed in 1986, many consulting firms placed their employees on salaries to avoid the overtime, often at the expense of the employee. He said many workers who were earning $2,000 a week on an hourly basissuddenly found themselves earning $1,200 a week.
Shulman predicted many employers, faced with a shortage of skilled workers, would now go back to hourly pay to attract and keep employees.