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This fact sheet provides general information concerning the exemption
provided by Section 13(a)(1) of the FLSA as defined by Regulations, 29 CFR
Part 541.
Characteristics
Section 13(a)(l) of the FLSA exempts executive, administrative,
professional, and outside sales employees from the minimum wage and
overtime requirements of the FLSA, provided they meet certain tests
regarding job duties and responsibilities and are compensated "on a
salary basis" at not less than stated amounts. Subject to certain
exceptions set forth in the regulations, in order to be considered "salaried",
employees must receive their full salary for any workweek in which they
perform any work without regard to the number of days or hours worked.
This rule applies to each exemption that has a salary requirement (outside
sales employees, and certain licensed or certified doctors, lawyers and
teachers have no salary requirement. For certain computer-related
occupations under the professional exemption, they need not be paid a
salary if they are paid on an hourly basis at a rate not less than $27.63
per hour). The special requirements which apply to each category of
employees are summarized below.
Executive Exemption
Applicable to employees who have management as their primary duty; who
direct the work of two or more full-time employees; who have the authority
to hire and fire or make recommendations regarding decisions affecting the
employment status of others; who regularly exercise a high degree of independent
judgment in their work; who receive a salary which meets the requirements
of the exemption; and who do not devote more than 20% of their time to non-management
functions (40% in retail and service establishments).
Administrative Exemption
Applicable to employees who perform office or non-manual work which is
directly related to the management policies or general business operations
of their employer or their employer's customers, or perform such functions
in the administration of an educational establishment; who regularly
exercise discretion and judgment in their work; who either assist a
proprietor or executive, perform specialized or technical work, or execute
special assignments; who receive a salary which meets the requirements of
the exemption; and who do not devote more than 20% of their time to work
other than that described above (40% in retail and service
establishments).
Professional Exemption
Applicable to employees who perform work requiring advanced knowledge
and education, work in an artistic field which is original and creative,
work as a teacher, or work as a computer system analyst, programmer,
software engineer, or similarly skilled worker in the computer software
field; who regularly exercise discretion and judgment; who perform work
which is intellectual and varied in character, the accomplishment of which
cannot be standardized as to time; who receive a salary which meets the
requirements of the exemption (except doctors, lawyers, teachers and
certain computer occupations); and who do not devote more than 20% of
their time to work other than that described above.
Outside Sales Exemption
Applicable to employees who engage in making sales or obtaining orders
away from their employer's place of business and who do not devote more
than 20% of the hours worked by non-exempt employees of the employer to
work other than the making of such sales.
Typical Problems
Some problems and misconceptions which are commonly found in the
application of the Section 13(a)(1) exemptions are:
- Employers without a formal sick leave policy docking salaried,
exempt employees for time missed from work because of sickness.
- Employees not receiving full salary payments each week.
- Employees performing routine production type duties that seem
related to general business operations but which have no bearing on
setting of management policies.
- Employees who hold degrees performing jobs which are not
professional in nature or to which the degree they hold is not
applicable.
- Employers confusing acquired job skills with the exercise of independent
judgment and discretion.
- Employees placed on salary and classified as exempt without regard
to duties or percentage of time spent in exempt duties.
Where To Obtain Additional Information
This publication is for general information and is not to be considered
in the same light as official statements of position contained in the
regulations.
For additional information, visit our Wage-Hour website: http://www.wagehour.dol.gov and/or call our Wage-Hour toll-free information and helpline, available 8am to 5pm in your time zone, 1-866-4USWAGE (1-866-487-9243).
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