Introduction to the Fair Labor Standards Act (FLSA)

O VERTIME E XEMPTIONS

S ECTION 5

A. T HE G ENERAL “W HITE -C OLLAR ” E XEMPTIONS Executive, administrative and professional – or “white collar” – employees are exempted from the Act’s overtime requirements. 114 It is critical for employers to understand the exemptions and to apply them correctly, to prevent liability for unpaid FLSA overtime. To qualify for an executive, administrative or professional exemption, the employee must receive a minimum salary of $455 per week. 115 Additionally, the employee must be paid on a “salary basis.” 116 Together, these two prongs compromise the “salary” test. The employee must also satisfy the appropriate “duties” test. 1. T HE S ALARY T ESTS Technically, there are two components to the salary tests. First, the employee must be paid a salary of “not less than 455” per week. 117 Second, is the requirement that exempt employees, except teachers, lawyers, or doctors, 118 be paid on a “salary basis.” “Salary basis” means payment of a predetermined amount of pay on a weekly or less frequent basis, regardless of the quality or quantity of work actually performed. With certain limited exceptions, 119 the general rule is that an employer may not deduct any amount from an exempt employee’s salary for the quantity of work performed or absence. 2. T HE D UTIES T ESTS Assuming the salary tests are met, the corresponding “duties test” must be performed to ascertain whether the executive, administrative, or professional exemption applies. The duties tests are based upon a determination of an employee’s “primary duty.” An employee’s “primary duty” is defined as “the principal, main, major or most important duty that the employee performs.” 120 A determination of what tasks constitute an employee’s primary duty must be made on a case-by-case basis. The following non-exclusive list of factors should be considered when determining an employee’s primary duty:

 The relative importance of the exempt duties as compared with other types of duties;

 The amount of time spent performing exempt work;

 The employee’s relative freedom from direct supervision; and

 The relationship between the employee’s salary and the wages paid to other employees for the kind of nonexempt work performed by the employee. 121

The amount of time an employee spends performing exempt work is a useful guide, but is not the sole factor for determining exempt status. 122 For example, “assistant managers in a retail

Introduction to the Fair Labor Standards Act (FLSA) ©2019 (s) Liebert Cassidy Whitmore 26