Determining Exempt vs. Non-Exempt Employees

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Determining Exempt vs. Non-Exempt Employees

The Fair Labor Standards Act (FLSA) is a federal law which requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 in a workweek. The FLSA exempts some employees from its overtime pay and minimum wage provisions, and it also exempts certain employees from the overtime pay provisions only. As a result, it is very important to properly classify your employees as exempt or non-exempt.

Job Title Alone Not Sufficient to Determine Status
According to the U.S. Department of Labor (DOL), neither job titles nor job descriptions determine the exempt or non-exempt status of an employee. Rather, whether any particular employee is exempt (not entitled to the minimum wage and overtime pay protections of the FLSA) is based on whether the employee’s compensation and specific job duties meet all the requirements of the regulations for the particular exemption claimed.

Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees
One of the more commonly used exemptions under the FLSA exempts from both minimum wage and overtime pay protections bona fide executive, administrative, professional and outside sales employees, as well as certain employees in computer-related occupations. To qualify for exemption, an employee generally must be paid on a salary basis of no less than $455 per week and perform certain types of work that:

  • Is directly related to the management of his or her employer’s business, or
  • Is directly related to the general business operations of his or her employer or the employer’s clients, or
  • Requires specialized academic training for entry into a professional field, or
  • Is in the computer field, or
  • Is making sales away from his or her employer’s place of business, or
  • Is in a recognized field of artistic or creative endeavor.

Hourly paid employees who perform certain types of work in the computer field may qualify for exemption if they are paid at a rate of not less than $27.63 per hour.

FLSA Overtime Security Advisor
To help employers identify those workers who are entitled to the minimum wage and overtime pay protections of the FLSA, the DOL maintains an interactive, web-based tool called the FLSA Overtime Security Advisor. Based on the information you supply in response to various questions, the Overtime Security Advisor provides general guidance on the executive, administrative, professional, computer or outside sales exemption that may apply to a particular employee.

Note that the FLSA contains several other exemptions from the minimum wage and/or overtime pay protections which are not covered in this Advisor.

Various minimum wage exceptions may also apply under specific circumstances to workers with disabilitiesfull-time studentsyouth under age 20 in their first 90 consecutive calendar days of employment, tipped employees and student-learners.

The DOL has set new records for aggressive Wage and Hour enforcement. As an employer, if you need help to ensure that your workers are properly classified, please call the Wage and Hour Division at 1-866-487-9243.