Administrative Exemption: What you need to know

Under both the federal 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 HCEs, certain retail sales employees, and employees covered by the Motor Carrier Act (MCA).

Practice tip: 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.

Salary. Exempt white-collar employees must perform certain types of work, and they must generally be paid on a salary basis and receive a minimum salary. To be exempt, employees must generally be paid a predetermined amount each pay period. The amount paid may not be reduced because of a variation in the quality or quantity of the work performed. With limited exceptions, the employee must receive his or her full salary for any week in which he or she performs any work, without regard to the number of days or hours worked. However, the employee need not be paid for ...