This is the second part in a series of articles designed to explain the basics of the Fair Labor Standards Act (the “FLSA”), the rights of employees under the FLSA, and those areas which create a high risk of liability for employers. This second article discusses the definition of an exempt employee under the FLSA and how to determine whether you have been improperly classified as “exempt” from wage and overtime regulations by your employer.
Who is an “Exempt” Employee under the FLSA
The FLSA exempts certain employees from the mandatory payment of overtime. Those exceptions are generally for employees who are considered to be employed as bona fide executive, administrative, professional and outside sales employees. To qualify for an exemption the employer must demonstrate such employees meet certain tests regarding their job duties, and be paid a certain, minimum salary. Importantly, your job title does not determine your status.
What is the Minimum Salary Requirement?
To qualify for an exemption You are generally required to be paid at least $455 per week on a salary basis (unless your exemption is a sales based exemption). The salary requirement does not apply, however, to outside sales employees, teachers, and employees practicing law or medicine. Computer employees should be paid either $455 on a salary basis or on an hourly basis at a rate not less than $27.63. Notably, these amounts are subject to change in the coming year.
You are paid on a salary basis if you receive a predetermined wages each pay period on a weekly, bi-weekly, or monthly basis. That amount cannot be subject to reduction based on the quality of your work, or the amount of time you work during a given pay period. Employers are entitled to deduct from your pay for full days missed due to personal reasons or for illness, if done in accordance with an employer’s plan to deal with such absences.
What Are Some Common Exemptions?
- Executive Exemption: To qualify for this exemption you must be compensated on a salary basis as described above. Your duties should inlcude managing the business for which you work, or a department or division of that business. As a part of that management you should be responsible for two or more, other, full-time employees, and have the authority to hire or fire other employees, or your suggestion to do so must be given particular attention and weight.
- Administrative Exemptions: To qualify for this exemption you must be compensated on a salary basis as described above. Your duties must include the performance of office/non-manual work, related to the management or operations of the business for which you work, or for the businesses’ customers, and you must exercise discretion and independent judgment as to significant decisions.
- Professional Exemption: To qualify for this exemption you must be compensated on a salary basis as described above. Your primary duties must require advanced knowledge, primarily intellectual in character, and require the consistent exercise of discretion or judgment. You must work in a field related to science or learning, and your advanced knowledge must be acquired through a prolonged course of study and instruction.
- Computer Employee Exemption: The computer employee exemption includes a series of detailed and complex tests, which will be addressed specifically, later in this series.
- Outside Sales Exemption: To qualify for this exemption your primary duty must be making sales, or obtaining orders or contracts for services or facilities for which a customer will pay a fee, and you must be customarily and regularly away from your employer’s place of business.
- Highly Compensated Employees: Highly compensated employees performing office work and paid a total of $100,000 or more (which must include the salary as described above) are also exempt if they meet at least one of the tests for an exempt professional, executive or administrative employee.
What if I Have Been Misclassified As Exempt
If you have been paid as an “exempt” employee under one of the exemptions listed above, but do not think you properly qualify for such an exemption, you may be owed overtime wages for hours worked by you in excess of 40 hours per week. The misclassification of employees is one of the most common schemes used by an employer to avoid the payment of overtime wages to its employees. The FLSA permits such a misclassified employee to seek the payment of unpaid overtime wages and statutory penalties.
If you have concerns regarding whether you have been misclassified as an “exempt” employee or otherwise have been properly compensated under the FLSA, please contact Robert Linkin at Duggins Wren Mann & Romero to discuss your rights. Rob is a partner with DWMR and represents Plaintiffs in FLSA matters. Rob can be reached at (512) 744-9300 or at rlinkin@dwmrlaw.com.