Compensation of Consulting Engineers: Legalities and Realities

Engineers are generally considered to be “professional” employees and, therefore, exempt from the wage and hour standards of the Fair Labor Standards Act (FLSA). The FLSA requires that such professional employees (1) perform duties that are above and beyond the routine tasks generally performed by nonprofessionals; and (2) be paid a salary. Compensation practices at many engineering consulting firms do not meet the FLSA’s definition of a salary. This paper examines the requirements for the professional exemption, summarizes the results of a survey that was sent to engineering firms in Alaska, compares the common practices found with interpretations of the federal regulations, and recommends practices that are fair to both the employee and the employer.