Salary Employees Laws

Salary employee laws are rules and regulations set forth by the Fair Labor Standards Act (“FLSA”). It covers certain requirements for salaried employees regarding pay and overtime.

A few occupations are rejected in the statute itself. When in doubt, if an occupation is represented by some other government work law, the FLSA does not have any significant bearing, i.e., railroad employees as these employees are covered by the Railway Labor Act. Furthermore, truck drivers are governed by the Motor Carriers Act, and not the FLSA. If the employee is exempt under the FLSA, then this means that the employee has absolutely no rights at all under the FLSA overtime rules. Therefore, when it comes to working more than 40 hours a week, an employee cannot be paid additional compensation. Essentially, exempt employees do not get paid an hourly rate, do not punch a timeclock, do not makeup hours, do not work a particular schedule, and are not protected under the FLSA whatsoever. However, that doesn’t mean that exempt employees don’t have any rights. In fact, most exempt employees do in fact have rights under employment contracts and the overall employee policies of the business.

Exempt or Nonexempt     

It is important to know the difference between exempt and non-exempt. Exempt employees usually receive a salary. Therefore, they do not receive an hourly rate. Non-exempt employees, however, receive an hourly rate and are generally permitted and required to receive overtime pay. This distinction is important so that you can fully understand the salary laws for exempt employees.

Employees who are paid under $23,600 consistently ($455 consistently) are automatically non-exempt as it doesn’t meet the required monetary threshold under the FLSA. However, there are additional considerations that you must keep in mind, particularly for workers who earn tips and commissions. Therefore, these amounts are generally taken into consideration when utilizing this monetary threshold. Furthermore, the $455/week test is met with a strict standard, as any deviation in this amount can warrant an employee’s exempt status into a non-exempt status.  

Duties Test

If an employee meets the salary test mentioned above, he or she may still remain exempt even though that monetary threshold is not met. For example, if certain duties are performed on the job, i.e., exempt job duties, then that person could, in fact, be exempt and not a non-exempt employee. Some of these job duties include:

  • Supervision of two or more employees
  • Managing a process
  • Has the ability to hire/terminate/promote/assign duties and people

Keep in mind that merely supervising people is not sufficient. The individual must also have the ability and duty to interview, train, set rates of pay, plan and determine work techniques, provide safety in the workplace, monitor work for legal and regulatory compliance, as well as other similar job duties. Therefore, within each of the three elements mentioned above, additional duties must be met.

Similarly, the employee must not just manage a process, but have decision-making abilities in the day to day operations of that process, including changes, enhancements, etc.

The last element, which includes the ability to hire and fire employees, as well as promote and assign duties, means that the employee must have full access to all of these actions. He or she must be able to make a sole determination in who can and should be promoted, hired, or fired. While the employee may need to seek consultation from outside/inside counsel or even senior management, the initial determination will need to be made by the employee in the supervisory position.

Exempt Professional Job Duties   

This includes learned professionals. A learned professional is someone who has had advanced training in a certain area, usually in an area in which an advanced degree is required. Therefore, it generally requires an advanced degree as well as specific job training and knowledge of a particular area that others don’t otherwise have access to unless they obtain a specific degree. This can include any one of the following:

  • Lawyers
  • Doctors
  • Engineers
  • Teachers
  • Dentists
  • Clergy

Also included in this category are creative professional job duties. These duties include imagination, invention, talent, and often refer to those working as singers, actors, dancer, writers, etc.

If you find yourself in this type of occupation or utilizing these skills in your occupation, you are likely exempt.

Exempt Administrative Job Duties

Office work that is directly related to management or the overall daily business operations for the employer that involves significant matters is an exempt administrative job duty. All elements within this statement must be met. Therefore, the work must be office work (not manual work) that is directly related to the general and overall business operations. It must also involve the exercising of independent judgment. Lastly, it must be work that involves significant matters.

Secretaries or low-level administrative assistants are not included in this exemption. It must be a high-level type of position whose primary job function is to keep the operations of the business going. This could include someone like a Chief Operating Officer (“COO”). While an argument can be made that some Secretaries are considered high level, it depends on who the secretary is supporting. If the secretary is, in fact supporting the CEO, there is a better argument for an exemption. However, if the secretary is assisting a Director, and there are hundreds of Directors for that business, then the security is not exempt.

Computer-Related Roles

Those operating in this industry, particularly computer software engineers, computer analysts, computer programmers, and the like all are generally exempt. However, certain job duties must be performed by these employees, including:

  • Working on hardware and software functionalities
  • Designing, developing, documenting, and analyzing computer systems and programs
  • Testing such programs to ensure they work properly
  • Enhancing, modifying, or removing such computer systems

Highly Compensated Employees

Highly compensated employees are those who perform office (non-manual) work and are paid at least $100,000/year, at least $455/week. If you are paid less than $455/week and are suddenly paid a large lump sum at one given point in time, then you are not part of this exemption. In addition, you must meet one of the duties in the exempt executive, administrative, or professional employee category in order to qualify for this exemption.

While there are several exemptions, each one has a particular set of elements that must be met. Therefore, it is not a one-part test that can be easily attained. If a company is paying you as an exempt employee based on one of these exemptions, but you believe that you should, in fact, be considered a non-exempt employee, then you will want to visit the Department of Labor or FLSA website to ensure that you meet the requirements for that particular exemption.

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