Quick Overview of FLSA Exemption Categories
The FLSA establishes minimum wage, overtime pay, and youth employment standards. All employees in the private sector and federal, state, and local governments must comply with these standards.
Correct employee classification of exempt versus nonexempt employee status is important to all employers. Employers cannot arbitrarily assign their employees to one classification or the other based upon employee requests or ease of payroll processing. Instead, the FLSA offers clear guidelines and tests that guide employers while making this determination.
Note that while regulations vary from state to state, employees classified as non-exempt are normally paid by the hour and receive 1.5 times their standard hourly rate for all hours worked over 40 in the designated workweek. Workers in the following job categories may be deemed exempt from receiving overtime:
Executive: An example of job duties & responsibilities for executive employees include the authority to make recommendations regarding the hiring and firing of employees, as well as promotions and other status changes.
Professional: Employees falling under the professional exemption must perform work requiring advanced knowledge, which is defined as predominantly intellectual. An expectation for the consistent use of discretion and judgment in their role is a staple of an employee falling under the ‘professional’ category.
Administrative: Administrative employees’ job duties must be directly related to management or general business operations.
Examples of other exemption categories include outside sales and computer professionals.
The Department of Labor determines whether an employee is correctly classified by evaluating them with a series of tests. While these tests may seem straightforward and clear to read, the interpretations require a certain level of knowledge, and they are based on interpretations found in case law and interpretive bulletins. In order for an employee to be considered exempt, they will be measured up against and have to meet qualifications across the following categories:
Job Responsibilities
Skill set/experience required for the position
Level of authority and responsibility undertaken
Compensation
Proper classification ensures compliance with the Fair Labor Standards Act. As always, we’re here to help you interpret the regulations and provide any assistance you may find valuable.
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