The Fair Labor Standard Act (FLSA) is administered by the Department of Labor (DOL) and establishes standards for minimum wage, overtime pay, and child labor. However, the law does not apply to every position in an organization. Some jobs are excluded from FLSA coverage and are considered “exempt.” To qualify for exemptions, positions must meet certain standards and requirements, and cannot be determined solely based on job title.
Generally, all exempt positions from minimum wage and overtime pay are on a salary basis at not less than $455 per week. In addition, the DOL provides exemptions for certain types of positions including executives, administrative employees, learned professionals, creative professionals, highly compensated employees, computer employees, and outside sales employees.
The following is a short guide to determining the exemption status of positions under FLSA, based on the DOL’s standards.
Executive Exemption
- Must be in a management position ofthe department, subdivision, or enterprise
- Must be in charge of at least two full time employees and regularly direct their work
- Must have the authority over their employment status, including to hire, fire, or promote
- Must own at least a bona fide 20-percent equity interest in the enterprise.
Administrative Exemption
- Must directly deal with business operations and perform non-manual work
- Must often apply independent judgment and discretion to significant matters
- Must work on tasks directly related to running or servicing the business
Learned Professional Exemption
- Must directly deal with business operations and perform non-manual work
- Must perform work requiring advanced knowledge and use of professional discretion and judgment
- Must have advanced knowledge in a field of science or learning that has a recognized professional status
- Must have attained advanced knowledge through a prolonged course of specialized intellectual instruction (generally beyond high school level)
- Includes teachers imparting relevant education and licensed employees in the practice of law or medicine
Creative Professional Exemption
- Must perform work associated with invention, imagination, originality, or talent in an “arts” or creative related field such as music, writing, graphic arts, and acting
Highly Compensated Exemption
- Must be paid $100,000 or more annually which includes commissions, nondiscretionary bonuses, and other nondiscretionary compensation earned during a 52-week period
- Must meet at least one of the responsibilities under executive, administrative, or the learned/creative professional exemption
- Must perform office or non-manual work
Computer Employee Exemption
- Must be a skilled worker in the computer field, such as a computer systems analyst, programmer, or software engineer
- Must routinely performthe following computer-related duties:
- application of system analysis techniques
- design, development, documentation, analysis, creation, testing or modification of computer programs and machine operating systems
Outside Sales Exemption
- Must have a working site at the customers’ location instead of his/her home or the employer’s location (e.g. door-to-door sales)
- Must have a primary function of customarily making sales or obtaining orders or contracts for services or for the use of facilities paid by clients
In addition, there are also a number of other FLSA exemptions which impact workers in unique jobs or industries, and ages. It is critical for employers to understand all of these exemptions in order to properly administer FLSA.
