FLSA Exemption Test: Everything You Need to Know
FLSA exemption test refers to the status of a job as outlined in Fair Labor Standards Act. It determines job is exempt or not as it to overtime obligations3 min read
What Is the FLSA Exemption Test?
The FLSA exemption test refers to the status of a job as outlined in the Fair Labor Standards Act. The FLSA determines whether a job is exempt or nonexempt as it relates to overtime obligations. Overtime pay, minimum wage, record requirements, age restrictions, and hours worked are some of the standards for employees outlined in this law.
Exempt employees, usually categorized as executive, professional, or administrative, are not covered by the protection of the FLSA and are consequently not entitled to overtime pay. These employees typically have comparatively advanced responsibilities for the company's operations on the whole, regardless of job title. The FLSA breaks this out into three main groups:
Non-exempt employees have to be paid the prevailing minimum wage for the region and receive overtime pay for any work performed past 40 hours in a given week. In accordance with FLSA regulations, these employees are entitled to be paid time and one-half of their usual pay rate for each hour of overtime worked.
Jobs Excluded From FLSA Coverage
There are two common types of jobs that are entirely excluded from FLSA coverage:
- Jobs that are specifically disqualified in the statute itself
- Jobs that are administered by another precise federal labor law
Definition of Overtime
Overtime is characterized as a scheduled time for employees to be on extra work duty resulting in time spent working during days off, on authorized vacation leave, paid leave, sick leave, paid military leave, compensatory time off, etc.
The Exemption Test
The FLSA uses five main exemption tests to decide if a job is non-exempt or exempt from overtime pay. The burden of proof is on the employer, as all work is designated as non-exempt until an employer completes one of the exemption tests and documents why they are not required to pay overtime.
The Executive Test
Positions that qualify for exemption under an executive test must include a key duty of managing the company or a routinely recognized department or subdivision of the business as well as pass the salary threshold. The person must also consistently and regularly manage the tasks of two or more full-time employees or equal representatives. They should also have the autonomy to fire or hire employees, as well as make relevant recommendations that are given the highest consideration.
The Administrative Test
This exemption test requires first passing a salary threshold. Then, under the administrative test, employees must have a principal duty of executing office and peripheral tasks associated with managing the general business operations of your employees or customers. The chief responsibility includes using discretion and autonomy to make judgment decisions based on priority.
The Professional Test
Once the salary requirement has been met, the professional test requires the employee to have exceptional knowledge and expertise needed to make and exercise careful discretion and judgment as it relates to primarily intellectual decisions. To qualify for the professional test, one must have highly-developed knowledge in a category of science or learning that has been acquired through extensive specialization, extensive intellectual training, or instruction.
The Outside Sales Test
This exemption test requires the employee to primarily work outside of the office and execute sales or work on contracts for services or goods. The most important requirement is that this employee must work almost extensively away from the primary business location performing tasks associated with initiating and closing a business sale.
The Computer Test
To meet the requirements for exemption under computer test, the employee needs to be working as a "computer programmer, computer systems analyst, software engineer, or another computer-skilled field." The main requirement is that they must execute the systems analysis procedures and techniques, including user consultations to determine system specifications, software or hardware.
The employee must be instrumental in the design, documentation, development, analysis, testing or modification of computer systems or programs. This includes prototypes, based on and related to system or user design specifications. They must also play a role in designing, documenting, testing, creating, or modifying computer programs related to machine operating systems. This test also requires the employee to pass a salary threshold.
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