Labor and Employment

Wages and Hour Law: Exempt vs NonExempt Employees

The Fair Labor Standards Act (FLSA) contains numerous exemptions, which apply to both the minimum wage and overtime provisions of the Act. While the exemption categories might seem straightforward, whether a particular job or business activity falls within an exemption category may not. You should keep in mind that the question of whether exemptions apply is determined on the basis of an employee's work week, and an exemption status could change from work week to work week. If an employee performs both exempt and nonexempt work within a work week, FLSA exemptions will not apply.

You should also know that courts tend to interpret exemptions narrowly against an employer trying to impose them, and they try to give support to the broad meaning of the FLSA intended by Congress.

FLSA's common categories of jobs which exemptions apply to include executive, administrative and professional positions (§ 13(a) of the 29 USC § 213(a)). 2004 Department of Labor regulations regarding white collar workers require overtime to be paid to employees earning less than $455 per week, or $23,660 annually. The regulations also provide that certain public safety officials and health care workers are entitled to overtime, as are "blue collar" workers.

The Wage and Hour Division of the U.S. Department of Labor (DOL) accepts questions from individuals, employers and other interested groups regarding how specific situations would be affected by FLSA provisions and regulations under the FLSA. The DOL responds via opinion letters, which can be found on the at DOL website. Since 2005, most of the DOL's opinion letters have addressed issues regarding regulations affecting executive, professional and administrative positions. Listed below is a sampling of results from DOL opinion letters.

Situations Where FLSA Exemptions May Apply:

  • Community college academic advisors
  • Museum curator
  • Municipal events and camps coordinators
  • Instructors at a career school
  • Department store loss prevention managers

Situations Where FLSA Exemptions May Not Apply:

  • Insurance claims adjusters
  • Information technology support specialists
  • Medical coders
  • Paralegals without advanced specialized professional degrees

There are exemptions under the FLSA that apply only to overtime requirements, and which apply to certain employees in areas including:

  • Retail and service employees
  • Agricultural employees
  • Transportation industry employees
  • Miscellaneous fields of employment, including seasonal amusement establishment workers, small-market broadcasters, motion picture theater employees, house parents for institutionalized children and possibly those engaged in providing companionship services

The applicability of FLSA exemptions to retail and service positions raises additional issues because the nature of a business as a "retail or service establishment" might be in question. The DOL has issued opinion letters stating that following types of businesses could meet the requirements to be considered as "retail or service establishments" under the FLSA:

  • Carpet and cleaning businesses
  • Health clubs
  • Franchise association of plumbing contractors mostly serving residential customers

An individual employee's status under the FLSA as exempt or nonexempt would then depend on the answers found by looking to the employee's work week, compensation, and type of work.

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