Are You an Exempt Employee Under the FLSA?

The Fair Labor Standards Act (“FLSA”) is an important federal law that regulates most workplaces in the United States. Among other things, it requires covered employers to pay their employees at least a set minimum wage for all hours worked and guarantees overtime pay of at least 1.5 times an employee’s regular wage for time worked that exceeds 40 hours in a workweek. However, these standards do not apply to employees who are classified as “exempt” under the FLSA. Knowing the difference between “exempt” and “non-exempt” will help employees understand what FLSA protections they may be entitled to. For employers, understanding the difference can prevent costly FLSA violations.

What is an “Exempt” Employee?

Broadly, an exempt employee is someone whose job is not governed by the FLSA requirements on minimum wage and overtime pay. Exempt employees are most often paid a regular salary, distributed in equal amounts, instead of an hourly wage. Because they are excluded from the FLSA pay requirements, an employer is not obligated to pay exempt employees overtime when they work more than 40 hours in a workweek.

Examples of FLSA exempt employees include:

● Executives and Managers: employees who supervise other workers and have authority over hiring, firing, or other workplace decisions;

● Administrative Employees: employees performing office work related to business operations (e.g., HR managers) that requires the exercise of discretion and independent judgment regarding significant matters;

● Professional Employees (Lawyers, Doctors, Engineers, Teachers, etc): employees in jobs which require advanced education in a field of science or learning (learned professionals) or employees who have a primary duty of performing work requiring invention, imagination, originality, or talent in a recognized artistic or creative field (creative professionals);

● Outside Sales Employees: certain sales employees who regularly work away from their employer’s place of business; and

● Computer and IT Employees: certain computer programmers, software engineers, and IT experts.

Job title alone is not sufficient to classify an employee as exempt or non-exempt under the FLSA. There are three major tests for whether an employee may be classified as exempt under the FLSA:

1. Salary Basis Test: Exempt employees must be paid a fixed amount on a regular basis (every week, biweekly, etc.), regardless of the number of hours worked during the pay period. There are very limited circumstances in which an employer can deduct from an exempt employee’s pay.

2. Salary Level Test: Exempt employees must be paid a minimum of $684 per week ($35,568 per year).

3. Job Duties Test: The primary purpose of an exempt employee’s job must be consistent with those performed in the executive, administrative, professional, outside sales, or computer fields.

If you have questions about FLSA standards, one of our attorneys can help. Contact McNeelyLaw with any inquiries by calling (317) 825-5110.

This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.