| The Fair Labor Standards Act of 1938 (FLSA) requires employers to pay a minimum wage and a premium hourly rate (time and one-half pay) for any hours worked in excess of 40 hours in a given week. Under the FLSA, however, certain salaried employees are exempted from the overtime pay guarantee. Generally, the FLSA exempts executive, administrative, professional, and outside sales employees from the minimum wage and overtime requirements of the FLSA. These exemptions apply, however, only when the employees meet certain tests regarding job responsibilities. They also apply only when the employees are paid on a salary basis at an amount not less than a certain amount. This article summarizes the three major salaried employees exemptions from the overtime and minimum wage requirements of the FLSA: administrative, profession, and outside sales.
Administrative Employees
Administrative employees are exempt from FLSA overtime and minimum wage requirements. To qualify as an administrative employee, a worker must:
- Perform office or non-manual work that is directly tied to the management policies or general business operations of the employer or its customers (includes administrative workers at education institutions);
- Regularly exercise discretion and judgment in his or her tasks;
- Assist a business owner or executive, or perform specialized or technical work, or execute special assignments;
- Receive a salary which exceeds $455 per week in most cases; and
- Not spend more than 20 percent of his or her time working in another capacity (40 percent in retail and service businesses).
Professional Employees
To qualify as an exempt professional employee, a worker must meet the following requirements:
- Perform work requiring advanced knowledge and education, work in an original and creative artistic field, work as a teacher, or work as a computer system analyst, programmer, software engineer, or other skilled computer software employee;
- Regularly exercise discretion and judgment;
- Perform work that is intellectual and varied in character, work that cannot be standardized as to time;
- Receive a salary in excess of $455 per week in most cases (except doctors, lawyers, teachers and some workers in the computer industry); and
- Not spend more than 20 percent of his or her time performing work that does not meet the above requirements.
Outside Sales Employees
Employees who perform sales work outside their employers' places of business are also exempt from FLSA overtime and minimum wage requirements. This exemption only applies if less than 20 percent of the hours worked by these employees are spent performing tasks that are not outside sales activities. There is no minimum salary requirement for the outside sales exemption. Copyright 2010 LexisNexis, a division of Reed Elsevier Inc. |