Executive Exemption laws & compensation compliance analysis

Executive Exemption: What you need to know

Under both the federal Fair Labor Standards Act (FLSA) and other federal laws applicable to public works projects, employers must pay overtime to employees who work in excess of 40 hours per week. However, the law exempts certain kinds of jobs from overtime requirements if they meet specific criteria in the law and in U.S. Department of Labor (DOL) regulations. The FLSA exempts broad categories of “white-collar” jobs from minimum wage and overtime requirements if they meet certain tests regarding job duties and responsibilities and are paid a certain minimum salary. These categories of employees are commonly known as “exempt” employees and include executive, administrative, and professional employees. The FLSA also provides exemptions for outside sales personnel, certain specialized computer personnel, certain highly compensated employees (HCEs), certain retail sales employees, and employees covered by the Motor Carrier Act (MCA).
An employer should periodically review the duties of exempt employees to ensure that they still qualify for exempt status, especially if the company has undergone restructuring or downsizing.
DOL’s final overtime rule effective January 1, 2020. The Department of Labor’s (DOL) final overtime rule, effective January 1, 2020, increases the current minimum salary threshold for overtime exemption. Under the final rule, employees would have to earn at least $684 per week ($35,568 per year) in order to be exempt from overtime pay for any hours worked over 40 in a workweek. This is an increase from the current $455-per-week threshold ($23,660 per year).
The final rule also increases the total annual compensation requirement for highly compensated employees (HCEs) from ...

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