Determining Fair Labor Standards Act (FLSA) classifications can be an extremely daunting task for businesses, especially for complex administrative roles. While most employees will fall under a non-exempt classification and are therefore entitled to overtime, others are not entitled to overtime or minimum wage.
For a position to be considered an exemption, or exempt from overtime and minimum wage, the FLSA has created exemption lists. The most commonly used exemptions are executive, administrative and professional. Together, they are known as “white collar exemptions,” and employees who are properly classified this way are exempt from timekeeping, minimum wage, and overtime.
How to determine exemptions
In order to qualify for these exemptions, each position must pass a three-part test.
- Duties test – The employee must perform specific tasks or duties specific to their exemption list.
- Salary level consideration – In order to be classified exempt under federal law, employees must earn at least $684 per week.
- Salary basis test – The last part of the three-part test requires that the employee be paid the same each week regardless of hours worked or the quantity or quality of their work. Reducing an exempt employee’s pay is only allowed in very limited circumstances.
If an employee meets all the criteria under one of the white-collar exemptions, the employee may be properly classified as exempt.
If an employee does not meet all the requirements of the three-part test, they must be classified as non-exempt. Thus, they are eligible for overtime when applicable, must record their time, and must be paid at least minimum wage for all hours worked.
Interested in learning more about FLSA exemption classifications?
Join us for a helpful webinar, Classifying and Paying Exempt Employees, on Thursday, April 15 at 12 noon CT.
For additional information
To understand more about FLSA exemption classifications, Insperity® Workforce Acceleration™ and Workforce Administration™ customers can access additional resources on the HR Support Center. (Workforce Optimization® customers should contact their service team for assistance.)