Are you the type of employee that is entitled to overtime pay?
Q. Could you explain the difference between exempt and non-exempt employees?
A. Under the Fair Labor Standards Act (FLSA), there are two different categories of employees – exempt and non-exempt. Exempt employees do not have to be paid overtime pay and/or minimum wage because their job position is subject to one of the exemptions listed under the FLSA. Each exemption under the FLSA has certain job criteria that must be met for the exemption to apply. Non-exempt employees are covered by the minimum wage and overtime laws and must be paid at least minimum wage and time and a half if they work more than 40 hours per week.
The exemptions provided for under the Fair Labor Standards Act are limited and narrow, and the burden is placed on the employer to prove that any given employee or class of employees is exempt.
The information below gives the requirements for some of the most common exemptions under the FLSA.
Executive Exemption
In order for a position to be exempt under the Executive Exemption, all of the tests below must be met:
The employee must be paid on a salary basis, at a rate of at least $455* per week ($684 per week as of 1/1/2020);
The employee’s primary duty must be managing the business or a department of the business;
The employee must supervise at least two or more other full-time employees or their equivalent; and
The employee must have the authority to hire or fire other employees, or the employee’s recommendations regarding hiring and firing must be taken into consideration.
Administrative Exemption
In order for a position to be exempt under the Administrative Exemption, all of the tests below must be met:
The employee must be paid on a salary basis, at a rate of at least $455* per week ($684 per week as of 1/1/2020);
The employee’s primary duty must include office or non-manual work involving the management or general business operations of the enterprise or it’s customers; and
The employee must exercise discretion and independent judgment regarding matters of significance.
Professional Exemption
For the Learned Professional Exemption to apply, the following tests must be met:
The employee must be paid on a salary basis, at a rate of at least $455* per week ($684 per week as of 1/1/2020);
The worker’s main duty has to be work that requires advanced knowledge which is mostly intellectual in nature. It must also require an employee to use discretion and judgment on a routine basis;
The advanced knowledge must come from the field of science or learning; and
The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
For the Creative Professional Exemption to apply, the following tests must be met:
The employee must be paid on a salary basis, at a rate of at least $455* per week ($684 per week as of 1/1/2020),
An employee’s main duty has to be performing work that requires imagination, invention, originality or talent in a particularly artistic or creative endeavor.
Computer Employee Exemption
For the Computer Employee Exemption to apply, the following tests must be met:
The employee must be paid on a salary basis or on a fee basis (as defined in the regulations) at a rate of at least $455* per week ($684 per week as of 1/1/2020), or if compensated on an hourly basis, at a rate not less than $27.63 an hour;
An employee has to be hired as a computer programmer, computer systems analyst, software engineer, or other similarly skilled work in the computer field who performs the duties listed below;
The employee’s main responsibility must consist of:
1) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
2) The creation, development, analysis, creation, testing, documentation, or modification of computer systems or programs, which could include prototypes, that or related to or based on system design specifics.
3) The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
4) A combination of duties listed above, the performance of which will require the same level of skills.
Outside Sales Exemption
For a position to qualify for the Outside Sales Exemption, the following tests must be met:
The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
The employee must be customarily and regularly engaged away from the employer’s place or places of business.
Highly-Compensated Employees
For the Highly-Compensated Exemption to apply, the following tests must be met:
The employee’s total annual compensation is $100,000 ($107,432 as of 1/1/2020) or more and includes a salary of at least $455* per week ($684 per week as of 1/1/2020),
The employee primarily performs office work or non-manual labor, and;
The employee regularly performs at least one of the exempt duties customarily performed by an exempt executive, professional or administrative employee (see the tests for these exemptions above.)
*Note: The Obama Administration increased the minimum “exempt” salary amount to $47,476 effective 12/1/16 but the increase was blocked by a court ruling. Instead, the Trump Administration only increased the minimum “exempt” salary to $35,568 per year as of 1/1/2020. Please see this page for the latest updates.
Blue Collar Workers
Exemptions for “white collar” workers are quite different from those that are applied to “blue collar” or manual laborers whose work involves repetitive tasks with their hands, physical skills, and energy. Blue collar workers in production, maintenance, construction or similar occupations like carpenters, plumbers, electricians, mechanics and other laborers are entitled to minimum wage and overtime pay under the FLSA. Regardless of their pay rate, these workers are not exempt.
Collective Bargaining Agreements
The Fair Labor Standards Act establishes a minimum set of wage and hour standards. These standards may may be exceeded but cannot be reduced or waived. Employers and employees may agree, through collective bargaining or otherwise, to a higher wage, shorter workweek, or a higher pay premium than those defined by the FLSA, but they cannot agree to lower standards than those set by the FLSA.
