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Technology & SaaS Companies: Payroll Compliance Guide (2026)
Payroll compliance for technology companies rests on the federal rules that reach this industry specifically, 4 of which are cited on this page, plus the deposit and filing duties every employer carries. BEG runs technology company payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
The rules that reach technology companies specifically
Computer systems analysts, programmers, software engineers, and similarly skilled workers are exempt from minimum wage and overtime under sections 13(a)(1) and 13(a)(17) if they meet the duties test and are paid either on a salary or fee basis at the standard salary level or on an hourly basis at not less than $27.63 an hour.
The computer employee exemption does not cover employees who manufacture or repair computer hardware, or workers such as engineers and drafters whose jobs depend heavily on computers but who are not primarily engaged in systems analysis, programming, or similarly skilled computer work.
The standard salary level for exempt executive, administrative, and professional employees is $684 per week ($35,568 per year), the total annual compensation requirement for highly compensated employees is $107,432 per year, and computer employees paid hourly must receive at least $27.63 per hour.
Sales employees who sell by phone, email, or the Internet from an office or home office are not outside sales employees, because a fixed site used for telephone solicitation counts as the employer's place of business. Inside sales staff paid on commission remain entitled to overtime unless another exemption applies.
The duties every employer carries
Federal income tax withholding, Social Security and Medicare, FUTA, deposits on the monthly or semiweekly schedule the lookback period sets, quarterly Form 941, annual W-2s and, for technology companies paying contractors, 1099-NEC at the $2,000 threshold in force for tax years after 2025. A late deposit starts at a 2 percent failure-to-deposit penalty and climbs to 15 percent.
When an employee exercises a nonstatutory stock option, the employer must report the excess of the stock's fair market value over the amount paid on Form W-2 in boxes 1, 3 (up to the social security wage base), and 5, and in box 12 using code V. Income from exercising an incentive stock option or an employee stock purchase plan option is not wages for social security, Medicare, or FUTA tax.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Computer systems analysts, programmers, software engineers, and similarly skilled workers are exempt from minimum wage and overtime under sections 13(a)(1) and 13(a)(17) if they meet the duties test and are paid either on a salary or fee basis at the standard salary level or on an hourly basis at not less than $27.63 an hour. [DOL Fact Sheet #17E]
- The computer employee exemption does not cover employees who manufacture or repair computer hardware, or workers such as engineers and drafters whose jobs depend heavily on computers but who are not primarily engaged in systems analysis, programming, or similarly skilled computer work. [DOL Fact Sheet #17E]
- The standard salary level for exempt executive, administrative, and professional employees is $684 per week ($35,568 per year), the total annual compensation requirement for highly compensated employees is $107,432 per year, and computer employees paid hourly must receive at least $27.63 per hour. [DOL WHD, Earnings thresholds for the EAP exemption (29 CFR 541.600)]
- Sales employees who sell by phone, email, or the Internet from an office or home office are not outside sales employees, because a fixed site used for telephone solicitation counts as the employer's place of business. Inside sales staff paid on commission remain entitled to overtime unless another exemption applies. [DOL Fact Sheet #17F]
- When an employee exercises a nonstatutory stock option, the employer must report the excess of the stock's fair market value over the amount paid on Form W-2 in boxes 1, 3 (up to the social security wage base), and 5, and in box 12 using code V. Income from exercising an incentive stock option or an employee stock purchase plan option is not wages for social security, Medicare, or FUTA tax. [IRS Publication 15-B (2026), Employee Stock Options]
Read the full guide to the payroll compliance library, and the rest of the technology company payroll library.
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Frequently Asked Questions
Technology company compliance: DOL Fact Sheet #17E
Computer systems analysts, programmers, software engineers, and similarly skilled workers are exempt from minimum wage and overtime under sections 13(a)(1) and 13(a)(17) if they meet the duties test and are paid either on a salary or fee basis at the standard salary level or on an hourly basis at not less than $27.63 an hour.
Technology company compliance: DOL Fact Sheet #17E
The computer employee exemption does not cover employees who manufacture or repair computer hardware, or workers such as engineers and drafters whose jobs depend heavily on computers but who are not primarily engaged in systems analysis, programming, or similarly skilled computer work.
Technology company compliance: DOL WHD, Earnings thresholds for the EAP exemption (29 CFR 541.600)
The standard salary level for exempt executive, administrative, and professional employees is $684 per week ($35,568 per year), the total annual compensation requirement for highly compensated employees is $107,432 per year, and computer employees paid hourly must receive at least $27.63 per hour.
What does managed payroll cost for a technology company?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Equity compensation handling, remote employee multi-state tax and contractor classification are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Technology & SaaS Companies. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Wage and Hour Division
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