Under the federal FLSA, employees must be paid minimum wage, employees are eligible for overtime pay, and other labor regulations apply. However, there is an exemption from overtime laws for workers that are employed in executive, administrative, and professional positions. When determining whether an employee is exempt, evaluate the duties the employees performs, instead of basing the decision on a job title. It is important to be sure an employee is properly classified as exempt or non-exempt as the exemptions are narrowly applied, the burden of proving an exemption is proper rest with the employer, and there can be high penalties for an improper classification.
An employee is properly classified under the executive exemption if all of the following tests are met:
This exemption is the most commonly misapplied exemption. Many times it is wrongly applied to all workers who perform administrative or clerical duties. Review the factors below, keeping in mind that work that involves following an established procedure or checklist, is generally not work that exercises discretion and independent judgment. Instead, the administrative employee has authority to make an independent choice, free from immediate direction or supervision, subject only to review at a higher level. An employee is properly classified under the administrative exemption if all of the following tests are met:
There are 2 subsets of professional employees, learned professionals and creative professionals. As an example, the learned professional worker is one who attained an academic degree for a field of science or learning such as a lawyer, doctor or architect. Generally, the creative professional performs work in a recognized field of artistic or creative value, which includes such fields as music, writing, acting and the graphic arts. An employee is properly classified under the learned professional employee exemption if all of the following tests are met:
An employee is properly classified under the creative professional employee exemption if all of the following tests are met:
Each state may have its own regulation regarding exemptions. Where a state law differs from the FLSA, an employer must comply with the standard that is most protective to employees.