Thursday, January 5, 2012
Court Reverses Overtime Pay Award to Computer Engineer
By SHERRI M. OKAMOTO, Staff Writer
A computer engineer for an information technology consulting firm yesterday had his award of two years of overtime pay reversed by the First District Court of Appeal.
Div. One, in an unpublished opinion by Justice Robert L. Dondero, explained that the Labor Code provision pertaining to computer software professionals that creates an exemption from laws requiring employers to pay overtime, does not preclude a trial court’s consideration of whether any other exemptions may apply to an overtime wage claim.
The issue arose in a dispute between Paul Joseph Ireland III and his former employer, Portola Systems Inc. The company is small, with three owner-partners, four support staff, and six to eight engineers.
Ireland was hired as an engineer in 2004, shortly after obtaining a four-year degree in information systems and his Cisco “certified network associate certification.”
By the fall of 2007, Ireland said he and some of his fellow employees were concerned that they did not receive overtime wages, and that Portola’s owners told him they were exempt as “administrative” workers under Labor Code Sec. 515.
Sec. 515 exempts executive, administrative, and professional employees from overtime requirements, “provided that the employee is primarily engaged in the duties that meet the test of the exemption, customarily and regularly exercises discretion and independent judgment in performing those duties, and earns a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.”
Ireland was terminated in August 2008, shortly after he submitted a letter of resignation. His salary at that time was $82,500 per year, which was roughly $39.66 per hour. He then filed a complaint with the with the Office of the Labor Commissioner, seeking overtime wages, interest, and penalties for overtime worked after Dec. 16, 2005.
Following an administrative hearing, Ireland was awarded $12,830.31 in overtime wages for the year 2006 only, plus $1,145.94 in interest.
Portola challenged the decision and sought a trial de novo, which was held before Sonoma Superior Court Judge Robert Boyd.
Boyd found that Labor Code Sec. 515..5—which establishes that upon meeting certain specified conditions, “an employee in the computer software field shall be exempt [from overtime regulations]”—was controlling.
He said that the more “specific” directives of this statute applied to Ireland over the more general exemption set forth in Sec. 515, which precluded him from considering whether the administrative exemption was applicable to Ireland.
Boyd determined that Ireland was an exempt employee under Sec, 515.5 during 2008 because his hourly wages exceeded the statutory threshold required to be found exempt during that year and then issued an award of $25,931.40 in overtime and interest for the years 2006 and 2007.
Ireland also received an award of $30,477.50 in attorney fees and costs.
Writing for the appellate court, Dondero explained that Boyd erred in finding a computer software professional employee may not be found exempt under alternative theories or statutes.
“[N]othing in section 515.5 explicitly states that no other exemptions may be applied to persons who otherwise qualify as employees in the computer software field,” Dondero noted, and the legislative history of the statute indicated that “the provision merely seeks to address special circumstances pertaining to computer software professionals.”
He reasoned that Sec. 515 and Sec. 515.5 are not “repugnant or irreconcilable with” each other as “each provides a potential basis for exempting an employee from overtime.”
Dondero posited that there is “no logical reason that an employee could not be covered by an exemption under alternative theories or statutes,” and so he said a court “should thus evaluate all potentially applicable statutory exemptions before deciding whether an employee is exempt from the right to receive overtime pay.”
The trial court’s failure to make an ultimate finding as to this issue and to consider the evidence presented in support of the applicability of the administrative exemption, Dondero added, was not harmless error.
Joined by Presiding Justice James J. Marchiano and Patricia D. Benke, Dondero directed the matter be remanded to the trial court to make these necessary factual findings.
The case is Ireland v. Portola Systems, Inc., A131021
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