As an hourly employee they legally have to be. If the company doesn't, they're in for a world of hurt if the employee decides to contact a lawyer. That assumes a level of privilege (knowing your rights, having enough money to pay for a lawyer's initial time, etc), but that level of privilege is common in software, so much so that no company with a legal department is going to let it fly to try and treat an hourly employee like a salaried one; there's just too much risk.