The FLSA is the federal law that protects most employees from employers who might try to take advantage of them. But the law does make a distinction between non-exempt and exempt employees, which is a very important distinction to keep in mind, since non-exempt employees are covered by FLSA rules and exempt employees are, as the word implies, exempt from being paid for overtime, among other protections. It is important to point our that in all exempt categories except one employees are required to make at least $455 per week.

The six key categories of exempt employees are as follows:

Outside Sales Employees

This applies to sales positions for which the majority of work is performed off company premises, when the employee is soliciting sales, orders and/or contracts of company goods and services. These people are paid on commission and their job is largely unsupervised. This is the only exemption without a minimum salary requirement.

Administrative Employees

To be exempt, an administrative employee must be in a position to exercise independent judgment and discretion in “matters of significance” while performing office or other non-manual labor. Administrative employees should be creating and influencing workplace policies, not simply following them. If the Department of Labor conducts an audit, the inspector will ask to see the job descriptions, and he/she will expect those “matters of significance” to be spelled out in great detail. Of course, a job description alone is not enough because what matters is the employee’s actual job responsibilities.

Executive Employees

This exemption covers senior managers whose primary duty consists of running a business or any division or department within that business. In order to qualify as exempt, these employees must have the authority to hire and fire other employees, as well as have a say with regard to promotions. They must also have a minimum of two full-time employees or an equivalent thereof, who directly report to the executive, in order to qualify as exempt.

Professional Employees

There are actually two subcategories under this category.

One is called the Learned Professional . This includes anyone whose job requires specific knowledge in an intellectual field that requires a long-term course of instruction in science or any other specialized discipline. This can include doctors, lawyers, architects, teachers, accountants, scientists or any of a number of fields, but the job must include their ability to exercise discretion and judgment. Usually, a Department of Labor inspector will ask for an academic degree, license or credential to serve as proof of the employee’s “specialized intellectual instruction.”

Another professional exemption is for the creative professional . This exemption is for people engage in work that requires invention, originality, imagination or talent, and can apply to such people as graphic artists, writers, actors or musicians.

Highly Compensated Employees

This exemption is reserved for those employees who earn a minimum of $100,000 per year, and who perform at least one of the functions of an exempt administrative, professional or executive employee.

Computer Employees

This exemption does not apply to everyone in a business’ IT department. Unfortunately for some workers, it is often applied too broadly by employers. The only workers who are exempt are those who act as software developers, systems analysts, programmers, testers, and software engineers. The exemption does not apply to help desk personnel, training personnel, data entry staff or those who set up or repair your hardware.

For those with a computer exemption, the minimum of $455 per week still applies, but the minimum annual salary must be $57,470, which comes out to a little more than $1,100 per week.

Important Note

Always keep in mind, these classifications tend to be evaluated on a job-by-job basis, and the evaluation is always based on the duties performed, not the title the employer slaps onto an employee. For example, if a job includes 95 percent duties as a laborer, and 5 percent duties as supervisor, it’s quite likely the Department of Labor would call that job as non-exempt.

References

http://www.dol.gov/dol/topic/youthlabor/exemptionsFLSA.htm

http://www.dol.gov/whd/overtime/fs17c_administrative.pdf

http://www.dol.gov/whd/regs/compliance/fairpay/fs17b_executive.pdf

http://www.dol.gov/whd/overtime/fs17d_professional.pdf

http://www.dol.gov/whd/overtime/fs17e_computer.pdf

http://www.dol.gov/whd/overtime/fs17f_outsidesales.pdf

http://www.dol.gov/whd/overtime/fs17h_highly_comp.pdf

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