Executives, administrative employees, professionals and outside salespeople are generally referred to in the wage and hour world as white-collar employees. Employees in these categories, who meet certain criteria, can be treated as being exempt from the minimum-wage, overtime and timekeeping provisions of the federal Fair Labor Standards Act (FLSA).

Before outlining the basic criteria to qualify for each of these exemptions, a few key points must be understood:

• Job descriptions can assist in generalizing about whether employees might or might not qualify for exempt status, but the determination ultimately depends upon what each person actually does in his or her daily work under the circumstances.
• The legal burden of establishing that a person is exempt rests with the employer, who must prove that each exemption requirement is met.
• Eligibility for these exemptions is construed narrowly.
• Employees do not qualify for this exempt status simply because they are paid salaries rather than on an hourly basis; are highly skilled or have special technical knowledge; want to be or agree to be treated as exempt; or make a lot of money in commissions.
• If an employer has any doubt as to the eligibility of a particular employee for a particular exemption, the cautious approach is to treat the employee as nonexempt.

The executive exemption

An executive employee is one:

• Whose primary duty is managing the enterprise by which he or she is employed or of a customarily recognized department or subdivision of that enterprise, and
• Who customarily and regularly directs the work of two or more other full-time employees (or the equivalent), and
• Who has the authority to hire or fire other employees, or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or other significant change of employee status are given particular weight, and
• Who is paid on a "salary basis" at not less than the required threshold amount (currently $455 per week but regulations that would have increased this amount have been suspended pending the outcome of federal litigation).

The administrative exemption

An administrative employee is one:

• Whose primary duty is office or nonmanual work which is directly related to the management or general business operations of either the employer or the employer's customers, and
• Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance, and
• Who is paid at least on a "salary basis" or a "fee basis" at not less than the required threshold amount (currently $455 per week but regulations that would have increased this amount have been suspended pending the outcome of federal litigation).

Special rules apply for administrative employees of educational establishments.

The professional exemption

A professional employee is one whose primary duty is work requiring:

• Knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction (The work must be predominantly intellectual and must include work requiring the consistent exercise of discretion and judgment), or
• Whose primary duty is work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor, and
• Who is paid on a "salary basis" or a "fee basis" at not less than the required threshold amount (currently $455 per week but regulations that would have increased this amount have been suspended pending the outcome of federal litigation).

This exemption also applies to someone whose primary duty is teaching, tutoring, instructing or lecturing in the activity of imparting knowledge, who is engaged in this activity as a teacher in an educational establishment by which he or she is employed. The rules do not require that a teacher be paid in any particular way.

The exemption also applies to holders of a valid license or certificate permitting the practice of law or medicine (or any of their branches) who are engaged in that practice. It also includes medical interns or residents holding the requisite degree who are engaged in an internship or a resident program. The rules do not require that these employees be paid in any particular way.

The computer-employee exemption

An exempt computer employee is one:

• Who is employed as a computer systems analyst, a computer programmer, a software engineer, or a similarly-skilled worker in the computer field, and
• Whose primary duty is:
  • The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications, or
  • The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications, or
  • The design, documentation, testing, creation or modification of computer programs related to machine operating systems, or
  • A combination of these duties, the performance of which requires the same skill level, and
• Who is paid on a "salary basis" or a "fee basis" at not less than the required threshold amount (currently $455 per week but regulations that would have increased this amount have been suspended pending the outcome of federal litigation), or who is paid on an hourly basis at a rate of at least $27.63 an hour.

The "outside salesman" exemption

An exempt "outside salesman" is one:

• Whose primary duty is making sales or obtaining orders or contracts for services or for the use of facilities, and
• Who is customarily and regularly engaged away from the employer's place(s) of business in performing that duty.

This exemption does not require that an "outside salesman" be paid in any particular way.

The "highly compensated employee" exemption

An exempt "highly compensated employee" is one:

• Whose primary duty includes performing office or non-manual work, and
• Who customarily and regularly performs any one or more exempt duties or responsibilities of an executive, administrative, or professional employee, and
• Who is paid on a "salary basis" or a "fee basis" at not less than the required threshold amount (currently $455 per week but regulations that would have increased this amount have been suspended pending the outcome of federal litigation), and
• Whose total annual compensation, including both salary and any commissions, nondiscretionary bonuses and other nondiscretionary compensation earned in a 52-week period, is not less than the required threshold amount (currently $100,000 per year week but regulations that would have increased this amount have been suspended pending the outcome of federal litigation).

The total-annual-compensation criterion is only one of four requirements for this exemption. It will not matter that an employee satisfies that requirement if he or she does not meet the duties-related tests or is not paid on the requisite basis.

Caution

This outline is for general-information uses only. It is not and should not be interpreted to be legal advice or to be a legal opinion on any specific facts or circumstances. We urge you to consult legal counsel competent in labor-standards matters concerning particular situations and any specific legal questions.