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Employers Struggle With Overtime Classification of Skilled Service Technicians

    Client Alerts
  • August 17, 2017

Over the past several years, we have received multiple inquiries from employers confronted with claims that they have misclassified service technicians as exempt from the overtime requirements of the Fair Labor Standards Act (FLSA), including from health care organizations. In a typical situation, the technicians in question are highly skilled and experienced workers who travel to customer locations for purposes of installing and servicing sophisticated machinery and equipment. The service technicians may be paid salaries close to six figures, and the equivalent time and one-half hourly overtime rate would be extremely high, especially given the amount of working time spent traveling.

In most cases, these employees do not qualify for any FLSA overtime exemption. Typically, the jobs do not require a specialized advanced degree such as a bachelor of science in engineering, meaning that the positions do not qualify for the professional exemption. The work involves hands-on functions adjusting or installing machinery and is therefore considered production work, making it ineligible for the administrative exemption. While the job duties may include some computer systems diagnostics or repair, usually they do not involve actual programming or systems analysis necessary to claim the computer professional exemption.

In the absence of any clearly applicable exemption, in an audit context the Department of Labor typically classifies these employees as nonexempt, entitled to overtime pay. Some technicians making over $100,000 per year may qualify for the highly compensated employee exemption, but outside of this option, employers should consider reclassification of service technicians to nonexempt.

Many employers faced with these overtime obligations decide to pay service technicians under an alternative pay plan designed to reduce overtime exposure. The most popular of these plans is the fluctuating workweek method. Instead of paying time and one-half overtime, fluctuating workweek guarantees a salary for all hours worked, and it pays a half-time overtime premium for weekly hours worked in excess of 40. Fluctuating workweek requires certain qualification criteria and employee notices, and it should not be implemented without legal assistance.

Employers with service technicians should review their overtime classification to confirm that they are accurately recording hours worked and are being paid overtime in compliance with legal requirements.