Skip to Main Content

FLSA – The White Collar Exemption Rules

Tuesday, July 24, 2018
FLSA – The White Collar Exemption Rules
Print

Highlights

White Collar Exemptions Apply to:

  • Executive, administrative and professional employees
  • Outside sales personnel
  • Certain computer employees
  • Certain highly compensated employees

Qualifications

To qualify for a white collar exemption, an employee must meet:

  • A salary basis test;
  • A salary level test; and
  • A duties test.

Links And Resources

  • DOL Fair Labor Standards Act Advisor

The Fair Labor Standards Act (FLSA) regulates minimum wage and overtime payment provisions for employees. Most employers and employees in the United States are subject to the FLSA.

Among other things, the FLSA requires employers to compensate their employees for all hours employees are “suffered or permitted” to work. This means that an employer must compensate its employees for all hours employees actually work and all hours during which employees are required to remain available for their next assignment.

However, the FLSA also provides various exemptions from minimum wage and overtime payment provisions. Among these, the most common are the “white collar” exemptions. The white collar exemptions apply mainly to executive, administrative and professional (EAP) employees, but they also include outside sales personnel and certain computer and highly compensated employees.

This Compliance Overview provides an overview of the white collar exemptions, as well as an overview of the requirements employees must meet to qualify for them. 

The White Collar Exemptions

To qualify for a white collar exemption, an employee must meet a salary basis test, a salary level test and a duties test. Job titles or salary wages alone do not determine exempt status. 

  • The salary basis test is used to make sure the employee is paid a predetermined and fixed salary that is not subject to reduction due to variations in the quality or quantity of work.
  • The salary level test is used to ensure that the employee meets a minimum specified amount to qualify for the exemption. This salary threshold provides employers with an objective and efficient way to determine whether an employee qualifies for a white collar exemption. The current salary level is set at $455 per week ($23,660 per year) for EAP employees and $100,000 per year for highly compensated employees.
  • The duties test requires that the employee’s job duties conform to EAP duties, as defined by law. This analysis requires a more thorough evaluation of whether an employee can be classified as an administrative, professional, outside sales, computer or highly compensated employee.

The white collar exemptions do not apply to:

  • “Blue collar” workers who typically perform manual labor. Blue collar worker occupations include mechanics, plumbers, electricians, construction workers and assembly line workers;
  • Law enforcement personnel – Police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, investigators, inspectors, correctional officers, parole or probation officers, and park rangers;
  • First responders – Firefighters, paramedics, emergency medical technicians, ambulance personnel and rescue workers; or
  • Hazardous materials workers (and similar employees), regardless of rank or pay level, who perform work such as preventing, controlling or extinguishing fires.

Duties Test

To satisfy the duties test, an employee’s actual work responsibilities must match the description the FLSA assigns to each exemption. The table below presents an overview of the job descriptions assigned for each white collar exemption.

Exemption Type Duties and Qualifications
Executive
  • The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
  • The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalents; and
  • The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
Administrative
  • The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
  • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Creative Professional
  • The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
Learned Professional
  • The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
  • The advanced knowledge must be in a field of science or learning; and
  • The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
Computer Employee
  • The employee must be compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week, or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;
  • The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;
  • The employee’s primary duty must consist of:
    • The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
    • 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;
    • The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
    • A combination of the aforementioned duties, the performance of which requires the same level of skills.          

 

Outside Sales

  • The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and
  • The employee must be customarily and regularly engaged away from the employer’s place or places of business.
Highly Compensated Employees
  • Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least equal to the salary level test paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption.

4

This Compliance Overview is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.
Readers should contact legal counsel for legal advice.

 

© 2016-2017 Zywave, Inc. All rights reserved. JPA 9/17

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.

Get Started

Let Your Aspirations Set the Agenda

Grow with who you know. Reach out to us today and start the conversation, so you’re better protected and prepared for what comes next.

Talk to an Advisor

man looking left