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Exploring the Administrative Employees Exception Under the Fair Labor Standards Act

WageHour

The Fair Labor Standards Act (“FLSA”) generally requires employers to pay their employees minimum wage for the hours they actually work. Additionally, the FLSA requires that employers must provide overtime pay to their employees who work over 40 hours per week. However, Section 13(a)(1) of the FLSA provides an exemption for minimum wage and overtime pay for employees who are employed in certain bona fide executive, administrative, professional and outside sales professionals.

If you are an exempt employee, you generally will not be entitled to receive overtime pay. They are only able to receive their base salary. This post will focus on the specifics for qualifying for an administrative employee exemption.

Administrative Employee Exemption

For an administrative employee to qualify for an exemption, they must meet the following requirements:

  1. An employee must earn more than at least $455 per week (this threshold was set to increase to $47,476 on December 1, 2016, but was enjoined nationwide on November 22, 2016);
  2. Have a principal or major duty of performing office or non-manual work directly related to management or business operations of the employer or employer’s customers; and
  3. Have a principal or major duty of exercising independent judgment or discretion for matters of significance.

The above-listed factors have several nuances that should be explored:

  • “On a Salary Basis”: An employee is considered paid “on a salary basis” if they earn a guaranteed minimum amount of money for each work week regardless of how many hours they work. One shortcut to figuring out whether you are paid on a salary basis is to see whether your base pay stays the same even if you work less hours in a given month.
  • “Directly Related to Management or General Business Operations”: To meet this requirement, an employee’s job duties must be related to helping to run or service the business. This would include budget or personnel management, auditing, legal compliance, purchasing, marketing/advertising, or public or labor relations.
  • “Discretion and Independent Judgment”: Determination of whether an employee has discretion and independent judgment looks to whether an employee has the ability to make choices without direct supervision and direction. The Department of Labor enumerates several factors to consider, including: if an employee has authority to perform duties that affect the operations or finances of a business, whether an employee can deviate from established practices of a business without approval, and whether an employee can implement management policies.
  • “Matters of Significance”: An employee’s work must be related to running the business rather than potentially merely causing an employer to experience financial losses if the employee does not perform his job duties.

Reach Out To Us For Assistance

Taking into consideration the fact-based nature of the inquiry, it can be difficult for an administrative employee to determine whether they fall under the FLSA exemption when initiating a complaint. The experienced Clearwater attorneys at Dilla Employment Law, P.A. can help go through the above-listed factors and determine what your specific rights are under the FLSA. Contact us today for a free consultation.

Resources:

dol.gov/whd/regs/statutes/FairLaborStandAct.pdf

shrm.org/ResourcesAndTools/legal-and-compliance/employment-law/pages/flsa-overtime-rule-infographic.aspx

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