Under the Fair Labor Standards Act (FLSA), “nonexempt” U.S. employees must be paid at least the federal minimum wage and one-and-one-half times their regular rate of pay for any hours they work over 40 in a workweek. Your business is not required to pay overtime to “exempt employees.”
The DOL, which administers and enforces the FLSA, provides specific criteria that must be met before an employee may be classified as exempt and ineligible for overtime pay. FLSA “white-collar” exemptions cover workers employed as executive, administrative, outside sales, and professional employees, as well as certain computer employees. Be careful, though. Job titles alone do not determine whether an employee is exempt.
Exempt executives must meet all of the following job tests:
To qualify for exemption under the administrative clause of the FLSA, employees must earn a salary of at least $455 per week and perform all of the following primary duties:
Exempt outside sales employees must meet all of the following tests:
To qualify for the computer employee exemption:
“Professional” work requires the consistent exercise of discretion and judgment, distinguishing it from positions involving routine mental, manual, mechanical, or physical labor. A professional employee generally uses advanced knowledge attained through education beyond high school to analyze, interpret or make deductions based on varying facts or circumstances.
There are two types of exempt professional employees: learned professionals and creative professionals.
To qualify for the learned professional exemption, employees must meet all of the following tests:
To qualify for the creative professional exemption, employees must meet every one of these tests:
Another category of white-collar exemptions is known as highly compensated employees, which comprises workers who regularly perform office or “non-manual” work and earn $100,000 or more annually. They are exempt and ineligible for overtime pay under the FLSA if they regularly perform at least one of the duties of an exempt executive, administrative or professional employee.
For more information about how to classify employees who hold occupations or work in industries cited in FLSA regulations, visit the DOL’s Wage and Hour Division website.