Whether an employee is exempt or non-exempt refers to whether or not the employee is exempt from the overtime requirements imposed by the Fair Labor Standards Act ("FLSA"). The FLSA requires that certain employees receive overtime pay for working more than forty hours per week. That's the general rule, but what are the exceptions that give rise to these exemptions?
Section 13(a)(1) of the FLSA provides an exemption from overtime pay for executives, administrative personnel, professionals, and outside sales employees. Sections 13(a)(1) and 13(a)(17) also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. While some employees clearly fall within one of these classifications, others are not so immediately evident.
For the executive exemption, the employee's primary duty must be managing the enterprise or a department or subdivisions thereof. The employee must customarily and regularly direct the work of two or more other full-time employees or their equivalent. The employee must also have the authority to hire or fire other employees or the ability to influence the hiring, firing, advancement, or promotion of others.
Exempt administrative personnel are those whose primary duties involve the performance of clerical work directly related to the management or general business operations of the employer or the employer's customers. The employee's duties must involve the use of discretion and independent judgment as to significant matters.
For the professional exemption, the employee's primary duty must be the performance of work that requires advanced knowledge in a field of science or learning. This advance knowledge must be customarily acquired by a lengthy course of specialized instruction. The employee's duties must require the use of discretion and judgment.
Exempt computer employees may be compensated on an hourly basis at a rate not less than $27.63 per hour. They must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing certain specified duties.
As you can see the categorization of an employee is highly fact-specific, and it is difficult and probably unwise to make generic determinations. The consequences of misclassification can be costly for both employers and employees alike so we encourage you to contact one of our attorneys to discuss any related questions.