Executive Exemption

To qualify for the executive employee exemption, all of the following tests must be met:

• The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $913.00 per week; and
• The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise; and
• The employee must customarily and regularly direct the work of at least two or more other full- time employees or their equivalent; and
• The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

Administrative Exemptions

To qualify for the administrative employee exemption, all of the following tests must be met:

• The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

  
  Professional Exemption

  To qualify for the learned professional employee exemption, all of the following tests must be met:

• The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $913 per week; and
• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $913 per week; and
• The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; and
• The advanced knowledge must be in a field of science or learning; and
• The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

  
  To qualify for the creative professional employee exemption, all of the following tests must be met:

• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $913 per week; and

• The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Computer Employee Exemption

To qualify for the computer employee exemption, the following tests must be met:

• The employee must be compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $913 per week, or if compensated on an hourly basis, at a rate not less than $27.63 an hour*; and

Outside Sales Exemption

To qualify for the outside sales employee exemption, all of the following tests must be met:

• The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
• The employee must be customarily and regularly engaged away from the employer’s place or places of business.

  
  Highly Compensated Employees

  Highly compensated employees performing office or non-manual work and paid total annual compensation of $134,004 or more (which must include at least $913 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption.

  Blue Collar Workers

  The exemptions provided by FLSA apply only to “white collar” employees who meet the salary and duties tests set forth in the regulations. The exemptions do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy. FLSA-covered, non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt under the regulations no matter how highly paid they might be.

  Police, Fire Fighters, Paramedics & Other First Responders

  The exemptions also do not apply to police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, investigators, inspectors, correctional officers, parole or probation officers, park rangers, fire fighters, paramedics, emergency medical technicians, ambulance personnel, rescue workers, hazardous materials workers and similar employees, regardless of rank or pay level, who perform work such as preventing, controlling or extinguishing fires of any type; rescuing fire, crime or accident victims; preventing or detecting crimes; conducting investigations or inspections for violations of law; performing surveillance; pursuing, restraining and apprehending suspects; detaining or supervising suspected and convicted criminals, including those on probation or parole; interviewing witnesses; interrogating and fingerprinting suspects; preparing investigative reports; or other similar work.

CLASSIFICATIONS – EXPLAINED

Hourly Nonexempt

Hourly nonexempt employees are paid based on the number of hours (or time) they work. Such employees are eligible for overtime at a rate of at least one and one-half the base hourly rate. Hourly nonexempt employees are classified as such because of the type of duties performed, the usual level of decision-making authority (of a significant nature), and the method of compensation. Nonexempt employees are normally required to account for hours and fractional hours worked.

Salaried Exempt

Employees classified as both salaried and exempt receive a weekly rate (instead of an hourly rate) that meets the minimum wage standard under the Fair Labor Standards Act (FLSA), plus they are exempt from the FLSA regulations on overtime pay based on their job duties and responsibilities. Employees who work in an administrative, executive or professional capacity generally are exempt from overtime rules because the work involves duties related to the company’s management. Some outside sales personnel and employees in computer-related occupations are exempt as well. The criteria for exempt classifications vary; however, a common thread in the exempt status criteria is that employees must use independent judgment in performing the majority of their job duties. Exempt workers do not receive overtime pay, yet the company expects them to work as many hours as it takes to fulfill their job duties, even if they have to work more than 40 hours during the workweek (smallbusiness.chron.com).

Salaried Non-Exempt Fluctuating Work Week (FWW)

Under the salaried nonexempt FWW method of payment an employee may be paid a fixed salary that serves as compensation for all hours worked if it is sufficient to compensate the employee for all straight time hours worked at a rate not less than the minimum wage and the employee is paid an additional one-half of the regular rate for all overtime hours instead of one and one half that is required under the hourly nonexempt classification (regular rate is calculated by taking the weekly rate and divide by the total number of hours worked).

The regular rate of pay will vary due to the fluctuating hours worked week to week. The full salary must be paid even when the full schedule of hours is not worked – no partial deductions from the base rate are permitted. Finally, there must be a clear mutual understanding of the parties that the fixed salary is compensation for however many hours the employee may work in a particular week, rather than for a fixed number of hours per week. A salaried nonexempt FWW employee is required to track hours worked including those hours in excess of 40-hours per week (www.DOL.gov).