Who’s the Boss? : Understanding Executive Exemption in the Fair Labor & Standards Act (FLSA)

Under FLSA rules, there are certain classifications of employees who are exempt from overtime pay rules.  However, in some instances, these rules or exemptions may be erroneously applied to employees who do not meet such criteria.  Employees with an annual salary above $23,660 and who meet certain other exemption requirements are not entitled to overtime under FLSA guidelines.  One of the most common classifications of “exempt” employees is the Executive or “management” exemption.  The Department of Labor estimates that approximately 85% of white-collar “exempt” employees meet the salary requirements for exempt status but fail the duties test.  This has prompted the Department of Labor to propose a raise in the annual salary requirement that will likely take effect in mid-late 2016.  The new proposed salary threshold is expected to be approximately $50,440 per year or about $970 per week.
Under the Executive Exemption test, there are a series of “job duties” that must be applied to determine if an employee meets the criteria.  The purpose of this “job duties” test is to ensure that in addition to salary, exempt employee classification is only applied to individual employees. They perform a “high level” of work on a regular basis.  Management is an often broad term applied to anyone with supervisory duties.  However, supervisory duties alone do not sufficiently qualify an employee for exemption under FLSA guidelines.  Management duties must also include at least some of the following:

  • Setting pay rates and hours/schedules
  • Decisions on employee selection (hiring/firing and/or interviewing candidates)
  • Decisions on standard operation procedures and types of equipment used
  • Ensuring legal and regulatory compliance
  • Handling of employee grievances and/or disciplinary actions
  • Producing budget reports and/or sales records

Management exemptions are often difficult or ambiguous to determine and must be evaluated individually.  An employee may be still classified as management even if the majority of their job is not engaged in “management duties”.  For instance, a construction foreman may be engaged in regular employee duties throughout the day, but still considered management if he still regularly performs additional management duties.
Management are not the only classified employments considered to be exempt under FLSA guidelines.  Other classifications include “administrative professionals”, “learned professionals”, and “creative professionals”.  Each of these classification requires evaluation by a experienced Employment and Labor Attorney.  The Law Firm of Massey & Duffy, PLLC has experienced attorneys who have represented employees with unpaid overtime wages.  Our attorneys are dedicated to aggressive representation and have successfully tried and won cases in both state and federal court.  If you believe you have been wrongfully classified as exempt and are due overtime wages, please call our office at (352) 505-8900 to schedule a FREE CONSULTATION.


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