Oracle Corp. recently entered into a settlement to pay $35 million to end a class action lawsuit that charged it with violating wage and hour laws. The suit was filed in 2007 and alleged that Oracle misclassified the workers as exempt workers to avoid paying overtime and meal breaks.
The $35 million settlement will be shared by 1,725 employees who will each get on average a little over $13,000. Our attorneys have helped many misclassified workers recover their rightful wages. If you think you are being misclassified as an exempt employee or an independent contractor, call our attorneys to help you evaluate your claims.
The three groups of workers involved in the class action were quality assurance workers, who test Oracle software, technical analysts, who provide customer support and answer questions, and project managers, who coordinate tasks for other employees. Oracle argued that these employees were either administrators or computer professionals and thus were exempt from state overtime laws and not subject to time and a half pay for hours worked in excess of 40 hours a week. The workers argued that each group worked long hours with repetitive tasks at modest salaries.
The FLSA provides that employees be paid both minimum wage and overtime pay at time and a half for hours worked in excess of 40 hours a week. In order to meet the exemption requirements, employees must meet certain tests pertaining to their job duties and be paid a salary of at least $455 per week. An employee’s job title alone does not qualify him or her for an exemption. For example, an employee may have title “executive vice-president” but if his or her sole job function is to make photocopies, the employee does not qualify for an exemption. Federal law provides an exception only for employees who are executives, administrative, computer, professional and outside sales representatives.
In order to be exempt as a computer employee, one must meet the following criteria:
- be compensated either at a rate of at least $455 per week or, if compensated on an hourly basis, then at a rate not less than $27.63 per hour;
- the employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties set forth below;
- his or her primary duties must include the following:
1) application of systems analysis techniques and procedures, including consulting with others, to figure out hardware, software or system functional specifications;
2) the design development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
3) the design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
4) a combination of the aforementioned duties, the performance of which requires the same level of skills.
Misclassification of employees is a common problem that affects not just the underpaid employees but also taxpayers and the economy. When employees are not compensated their correct wages, this in turn affects their spending and the amount of taxes they pay which in turn affects the entire economy. If you are not properly classifying your workers and are audited by the IRS or the Department of Labor, the penalties, interest, and back taxes can be devastating to your business. Call our Misclassification Attorneys at Villanueva & Sanchala at (800) 893-9645 to ensure that your company is in compliance with all state and federal laws.
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Fact Sheet #17A, U.S. Department of Labor