under the FLSA
Most jobs are governed
by the FLSA. Some are not. Some jobs are excluded from FLSA coverage
by statute. Other jobs, while governed by the FLSA, are considered
"exempt" from the FLSA overtime rules.
Particular jobs may
be completely excluded from coverage under the FLSA overtime rules.
There are two general types of complete exclusion. Some jobs are
specifically excluded in the statute itself. For example, employees
of movie theaters and many agricultural workers are not governed
by the FLSA overtime rules. Another type of exclusion is for jobs
which are governed by some other specific federal labor law. As
a general rule, if a job is governed by some other federal labor
law, the FLSA does not apply. For example, most railroad workers
are governed by the Railway Labor Act, and many truck drivers are
governed by the Motor Carriers Act, and not the FLSA. Many of FLSA
exclusions are found in §213 of the FLSA.
Exempt or Nonexempt.
Employees whose jobs
are governed by the FLSA are either "exempt" or "nonexempt."
Nonexempt employees are entitled to overtime pay. Exempt employees
are not. Most employees covered by the FLSA are nonexempt. Some
Some jobs are classified
as exempt by definition. For example, "outside sales"
employees are exempt ("inside sales" employeesare nonexempt).
For most employees, however, whether they are exempt or nonexempt
depends on (a) how much they are paid, (b) how they are paid, and
(c) what kind of work they do.
With few exceptions,
to be exempt an employee must (a) be paid at least $23,600 per year
($455 per week), and (b) be paid on a salary basis, and also (c)
perform exempt job duties. These requirements are outlined in the
FLSA Regulations (promulgated by the U.S. Department of Labor).
Most employees must meet all three "tests" to be exempt.
Employees who are paid
less than $23,600 per year ($455 per week) are nonexempt. (Employees
who earn more than $100,000 per year are almost certainly exempt.)
Generally, an employee
is paid on a salary basis if s/he has a "guaranteed minimum"
amount of money s/he can count on receiving for any work week in
which s/he performs "any" work. This amount need not be
the entire compensation received, but there must be some amount
of pay the employee can count on receiving in any work week in which
s/he performs any work. Some "rules of thumb" indicating
that an employee is paid on a salary basis include whether an employee's
base pay is computed from an annual figure divided by the number
of paydays in a year, or whether an employee's actual pay is lower
in work periods when s/he works fewer than the normal number of
hours. However, whether an employee is paid on a salary basis is
a "fact," and thus specific evaluation of particular circumstances
is necessary. Whether an employee is paid on a salary basis is not
affected by whether pay is expressed in hourly terms (as this is
a fairly common requirement of many payroll computer programs),
but whether the employee in fact has a "guaranteed minimum"
amount of pay s/he can count on.
The FLSA salary basis
test applies only to reductions in monetary amounts. Requiring an
employee to charge absences from work to leave accruals is not a
reduction in "pay," because the monetary amount of the
employee's paycheck remains the same. Similarly, paying an employee
more than the guaranteed salary amount is not normally inconsistent
with salary basis status, because this does not result in any reduction
in the base pay.
With some exceptions,
the base pay of a salary basis employee may not be reduced based
on the "quality or quantity" of work performed (provided
that the employee does "some" work in the work period).
This usually means that the base pay of a salary basis employee
may not be reduced if s/he performs less work than normal, if the
reason for that is determined by the employer. For example, a salary
basis pay employee's base pay may not be reduced if there is "no
work" to be performed (such as for a plant closing or slow
period), and a salary basis employee's base pay may not be reduced
for partial day absences. However, employers may "dock"
the base pay of salary basis employees in full day increments, for
disciplinary suspensions, or for personal leave, or for sickness
under a bona fide sick leave plan (as for example if the employee
has run out of accrued sick leave).
Thus, there can be "permissible"
and "impermissible" reductions in salary basis pay. Permissible
reductions have no effect on the employee's exempt status. Impermissible
reductions may, in that the general rule is that an employee who
is subjected to impermissible reductions in salary is no longer
paid on a salary basis, and is therefore nonexempt. However, employers
have several avenues by which they can "cure" impermissible
reductions in salary basis pay, and as a practical matter these
make it unlikely that an otherwise exempt employee would become
nonexempt because of salary basis pay problems.The salary basis
pay requirement for exempt status does not
apply to some jobs (for example, doctors, lawyers and schoolteachers
are exempt even if the employees are paid hourly).
The duties tests.
An employee who meets
the salary level tests and also the salary basis tests is exempt
only if s/he also performs exempt job duties. These FLSA exemptions
are limited to employees who perform relatively high-level work.
Whether the duties of a particular job qualify as exempt depends
on what they are. Job titles or position descriptions are of limited
usefulness in this determination. (A secretary is still a secretary
even if s/he is called an "administrative assistant,"
and the chief executive officer is still the CEO even if s/he is
called a janitor.) It is the actual job tasks that must be evaluated,
along with how the particular job tasks "fit" into the
employer's overall operations.
There are three typical
categories of exempt job duties, called "executive," "professional,"
Job duties are exempt
executive job duties if the employee
- regularly supervises
two or more other employees, and also
- has management as
the primary duty of the position, and also,
- has some genuine
input into the job status of other employees (such as hiring,
firing, promotions, or assignments).
Supervision means what
it implies. The supervision must be a regular part of the employee's
job, and must be of other employees. Supervision of non-employees
does not meet the standard. The "two employees" requirement
may be met by supervising two full-time employees or the equivalent
number of part-time employees. (Two half-time employees equal one
is not sufficient. In addition, the supervisory employee must have
"management" as the "primary duty" of the job.
The FLSA Regulations contain a list of typical management duties.
These include (in addition to supervision):
- interviewing, selecting,
and training employees;
- setting rates of pay
and hours of work;
- maintaining production
or sales records (beyond the merely clerical);
- appraising productivity;
handling employee grievances or complaints, or disciplining employees;
- determining work techniques;
- planning the work;
- apportioning work
- determining the types
of equipment to be used in performing work, or materials needed;
- planning budgets for
- monitoring work for
legal or regulatory compliance;
- providing for safety
and security of the workplace.
an employee has management as the primary duty of the position requires
case-by-case evaluation. A "rule of thumb" is to determine
if the employee is "in charge" of a department or subdivision
of the enterprise (such as a shift). One handy clue might be to
ask who a telephone inquiry would be directed to if the called asked
for "the boss." Typically, only one employee is "in
charge" at any particular time. Thus, for example, if a "sergeant"
and a "lieutenant" are each at work at the same time (in
the same unit or subunit of the organization), only the lieutenant
is "in charge" during that time.
An employee may qualify
as performing executive job duties even if s/he performs a variety
of "regular" job duties as well. For example, the night
manager at a fast food restaurant may in reality spend most of the
shift preparing food and serving customers. S/he is, however, still
"the boss" even when not actually engaged in "active"
bossing duties. In the event that some "executive" decisions
are required, s/he is there to make them, and this is sufficient.
The final requirement
for the executive exemption is that the employee have genuine input
into personnel matters. This does not require that the employee
be the final decision maker on such matters, but rather that the
employee's input is given "particular weight." Usually,
it will mean that making personnel recommendations is part of the
employee's normal job duties, that the employee makes these kinds
of recommendations frequently enough to be a "real" part
of the job, and that higher management takes the employee's personnel
suggestions or recommendations
The job duties of the
traditional "learned professions" are exempt. These include
lawyers, doctors, dentists, teachers, architects, clergy. Also included
are registered nurses (but not LPNs), accountants (but not bookkeepers),
engineers (who have engineering degrees or the equivalent and perform
work of the sort usually performed by licensed professional engineers),
actuaries, scientists (but not technicians), pharmacists, and other
employees who perform work requiring "advanced knowledge"
similar to that historically associated with the traditional learned
work means work which is predominantly intellectual, requires specialized
education, and involves the exercise of discretion and judgment.
Professionally exempt workers must have education beyond high school,
and usually beyond college, in fields that are distinguished from
(more "academic" than) the mechanical arts or skilled
trades. Advanced degrees are the most common measure of this, but
are not absolutely necessary if an employee has attained a similar
level of advanced education through other means (and perform essentially
the same kind of work as similar employees who do have advanced
Some employees may also
perform "creative professional" job duties which are exempt.
This classification applies to jobs such as actors, musicians, composers,
writers, cartoonists, and some journalists. It is meant to cover
employees in these kinds of jobs whose work requires invention,
imagination, originality or talent; who contribute a unique interpretation
Identifying most professionally
exempt employees is usually pretty straightforward and uncontroversial,
but this is not always the case. Whether a journalist is professionally
exempt, for example, or a commercial artist, will likely require
careful analysis of just what the employee actually does.
The most elusive and
imprecise of the definitions of exempt job duties is for exempt
"administrative" job duties.
The Regulatory definition
provides that exempt administrative job duties are
(a) office or nonmanual
work, which is
related to management or general business operations of the employer
or the employer's customers, and
(c) a primary
component of which involves the exercise of independent judgment
and discretion about
(d) matters of
The administrative exemption
is designed for relatively high-level employees whose main job is
to "keep the business running." A useful rule of thumb
is to distinguish administrative employees from "operational"
or "production" employees. Employees who make what the
business sells are not administrative employees. Administrative
employees provide "support" to the operational or production
employees. They are "staff" rather than "line"
employees. Examples of administrative functions include labor relations
and personnel (human resources employees), payroll and finance (including
budgeting and benefits management), records maintenance, accounting
and tax, marketing and advertising (as differentiated from direct
sales), quality control, public relations (including shareholder
or investment relations, and government relations), legal and regulatory
compliance, and some computer-related jobs (such as network, internet
and database administration). (See Computer
To be exempt under the
administrative exemption, the "staff" or "support"
work must be office or nonmanual, and must be for matters of significance.
Clerical employees perform office or nonmanual support work but
are not administratively exempt. Nor is administrative work exempt
just because it is financially important, in the sense that the
employer would experience financial losses if the employee fails
to perform competently. Administratively exempt work typically involves
the exercise of discretion and judgment, with the authority to make
independent decisions on matters which affect the business as a
whole or a significant part of it.
Questions to ask might
include whether the employee has the authority to formulate or interpret
company policies; how major the employee's assignments are in relation
to the overall business operations of the enterprise (buying paper
clips versus buying a fleet of delivery vehicles, for example);
whether the employee has the authority to commit the employer in
matters which have significant financial impact; whether the employee
has the authority to deviate from company policy without prior approval.
An example of administratively
exempt work could be the buyer for a department store. S/he performs
office or nonmanual work and is not engaged in production or sales.
The job involves work which is necessary to the overall operation
of the store -- selecting merchandize to be ordered as inventory.
It is important work, since having the right inventory (and the
right amount of inventory) is crucial to the overall well-being
of the store's business. It involves the exercise of a good deal
of important judgment and discretion, since it is up to the buyer
to select items which will sell in sufficient quantity and at sufficient
margins to be profitable. Other examples of administratively exempt
employees might be planners and true administrative assistants (as
differentiated from secretaries with fancy titles). Bookkeepers,
"gal Fridays," and most employees who operate machines
are not administratively exempt.
Merely clerical work
may be administrative, but it is not exempt. Most secretaries, for
example, may accurately be said to be performing administrative
work, but their jobs are not usually exempt. Similarly, filing,
filling out forms and preparing routine reports, answering telephones,
making travel arrangements, working on customer "help desks,"
and similar jobs are not likely to be high-level enough to be administratively
exempt. Many clerical workers do in fact exercise some discretion
and judgment in their jobs. However, to "count" the exercise
of judgment and discretion must be about matters of considerable
importance to the operation of the enterprise as a whole.
Routinely ordering supplies
(and even selecting which vendor to buy supplies from) is not likely
to be considered high- enough to qualify the employee for administratively
exempt status. There is no "bright line." Some secretaries
may indeed be high-level, administratively exempt employees (for
example, the secretary to the CEO who really does "run his
life"), while some employees with fancy titles (e.g., "administrative
assistant") may really be performing nonexempt clerical duties.
Rights of exempt
An exempt employee has
virtually "no rights at all" under the FLSA overtime rules.
About all an exempt employee is entitled to under the FLSA is to
receive the full amount of the base salary in any work period during
which s/he performs any work (less any permissible deductions).
Nothing in the FLSA prohibits an employer from requiring exempt
employees to "punch a clock," or work a particular schedule,
or "make up" time lost due to absences. Nor does the FLSA
limit the amount of work time anemployer may require or expect from
any employee, on any
schedule. ("Mandatory overtime" is not restricted by the
Keep in mind that this
discussion is limited to rights underthe FLSA. Exempt employees
may have rights under other laws or by way of employment policies
Rights of nonexempt employees.
are entitled under the FLSA to time and one-half their "regular
rate" of pay for each hour they actually work over the applicable
FLSA overtime threshold in the applicable FLSA work period. (See,