Exempt Employees

Exemptions to the FLSA are not based on job title but on the employee's actual duties, responsibilities, and level of discretionary authority. In addition, for most exempt employees, minimum salary requirements must be met. The following are four exempt white collar employees:

Executives
The main duty of an executive is to manage an enterprise, a department, or a departmental subdivision. To be classified as an executive, a person must direct the work of at least two workers, have hiring/firing authority, and use discretionary powers. No more than 20% (40% if retail) of the executive's workweek can be spent in nonexempt work. The executive must be paid a minimum weekly salary of $155. Executives include department managers and supervisors who are directly associated with management decisions and the direction of the staff.

Administrative employees
The main duty of exempt administrative employees is either (1) the performance of office work related to management policies or general business operations or (2) the administration of a school system. Employees and people who perform special assignments are exempt administrative employees. One test an administrator must meet is the use of independent judgment and discretion. Like executives, no more than 20% (40% if retail) of an administrative employee's workweek can be spent in nonexempt work. An exempt administrative employee must also be paid a weekly salary of at least $155. Examples of administrative exempt employees might include executive secretaries or confidential administrative assistants.

Professionals
The main work of professional exempt employees requires either (1) advanced knowledge customarily acquired by specialized study or (2) originality and creativity. Professionals must use discretion and independent judgment in their work. The work must be intellectual and varied, not standardized. No more than 20% of a professional's workweek can be spent in nonexempt tasks. The minimum weekly salary an exempt professional employee must be paid is $170. Teachers, engineers, and attorneys are examples of professional employees.

Those in highly skilled computer software occupations fall into another category of professional employees. The main duties of exempt computer professionals must include systems analysis, system or program design, or computer programming. To qualify, employees must be proficient in their field. The same minimum salary threshold of $170 per week is applicable, but computer professionals paid by the hour may also be exempt if their hourly rate exceeds $27.63.

Outside Salespeople
Outside salespeople are exempt if they meet two requirements: (1) they are customarily engaged in selling or getting orders for the company's product/service and (2) they spend less than 20% of their workweek in non-sales activities. There is no salary requirement for outside salespeople.

Special Exemptions
In addition to these four categories of exempt workers, certain classifications of employees are covered by overtime provisions different from the normal FLSA provisions. Some of these special exemptions are covered later under calculating overtime. Special provisions are made in the law for the following categories of workers:

Various transportation workers: motor workers, taxicab drivers, seamen, airline employees.

Agricultural workers.

Hospital and nursing home workers.

Public sector employees, firefighters, police officers, and others.

All exempt employees are exempt from FLSA regulations concerning overtime or the minimum

wage. Nonexempt employees must be paid the minimum wage and overtime pay.

Temporary / Leased Employees

Organizations may have individuals who are not classified as employees or independent contractors performing services. These individuals are employed by organizations described as temporary service agencies, Professional Employer Organizations, or leasing companies. The temporary service agency or leasing company bears the burdens of an employer—paying, withholding, reporting, and providing benefits. The company for which the employee provides service contracts with the temporary service agency or leasing company, not with the individual worker.