Under the Fair Labor Standards Act, U.S. employers must pay most types of employees at least the federal minimum wage when working 40 hours a week or less. If the employee works more than 40 hours in any given week, the employer must pay hourly overtime.
However, some types of white-collar employees may be exempt from minimum wage and overtime requirements if they work on a salary or fee basis.
1. Administrative employees
Employees who perform non-manual or office-related administrative work may be exempt if their primary duties involve:
- The direct management of company or client operations
- The discretion to use one’s independent judgment regarding significant business decisions
Work that may fall under an administrative exemption includes accounting, auditing, budgeting, marketing, personnel management, database administration and similar duties.
2. Learned professional employees
To qualify for a learned professional exemption, the employee typically must have advanced knowledge in a scientific or informational field and duties that routinely require analysis and judgment. Examples include teachers, engineers, accountants, pharmacists and others with advanced instruction in a specialized area.
3. Executive employees
Executive-level employees may be exempt if the worker’s primary responsibilities involve the management of the company itself or of a major department or subdivision. To qualify, these employees must have direct, consistent and significant authority over both a certain minimum number of employees and decisions regarding hiring, firing and promotion.
Other types of employees who may be exempt from FLSA overtime requirements include creative professionals, outside sales representatives and workers in computer-related occupations. However, in many cases, companies try to avoid meeting FLSA requirements by purposefully granting a title and salary without the authority and freedom of judgment required by law. Those working under a salaried title should know that they may be legally entitled to more than their employer is offering.