Countless organizations seem to struggle when distinguishing between Exempt and Non-Exempt employees, and rightfully so. The rules pertaining to exempt and non-exempt status are complex and rather confusing. Hopefully the below summary will provide helpful. Please keep in mind that the below information is a general outline. If you need further guidance regarding your employee’s status under FLSA (Fair Labor Standards Act) guidelines, please contact the US Department of Labor for clarification at 1-866-4-USWAGE.
Administrative Employees: To qualify as exempt under FLSA guidelines, all of the following conditions must be met:
- The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.
- The employee’s primary duty must include the exercise of discretion and independent judgment regarding matters of significance.
- The employee must be paid at least $455 per week on a salary or fee basis not including board, lodging, or other facilities.
Academic Administrative Employees: There is a separate administrative exemption for employees:
- Whose primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment
- Who are paid a salary for fee of at least $455 per week, not including board, lodging, or other facilities, or salary at least equal to the entrance salary for teachers in the educational establishment where they are employed.
Executive Employees: To qualify as exempt under FLSA guidelines, all of the following conditions must be met:
- The employee’s primary duty must be management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision of the enterprise.
- The employee must customarily and regularly direct the work of two or more other employees.
- The employee must have the authority to hire or fire other employees, or particular weight must be given to the employee’s recommendations as to the hiring, firing, advancement, promotion, or other change of employment status of other employees.
- The employee must be paid a salary of at least $455 per week, not including board, lodging or other facilities.
Professional Employees: To qualify as exempt under FLSA guidelines, all of the following conditions must be met:
- The employee’s primary duty must be the performance of work:
- Requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction (learned professional exemption)
- Requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor (creative professional exemption)
- The employee must be paid at least $455 per week on a salary or fee basis, not including board, lodging, or other facilities.
Computer Related Professional: The definition of exempt professional employees includes highly skilled computer professionals working as systems analysts, programmers, software engineers, or in similar positions who meet the other requirements for professional employee status.
To satisfy the duties test for the computer professional exemption, the employee’s primary duty must consist of on or more of the following:
- The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications.
- The design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications.
- The creation, design, documentation, testing, or modification of computer programs related to machine operating systems
- A combination of these duties, the performance of which requires the same level of skills.
Outside Sales Employees: To qualify as an exempt outside sales employee, each of the following tests must be met:
- The employee’s primary duty must be:
- Making sales of tangible or intangible items such as goods, insurance, stocks, bonds, or real estate; or
- Obtaining orders or contracts for services or the use of facilities; and
- The employee must customarily and regularly work away from the employer’s place or places of business in performing the employee’s primary duty.