Common Misconceptions About Salaried Employees: Who is Exempt from the Fair Labor Standards Act?

Emily Macheski-Preston

Tuesday, April 24th, 2012

Many business owners assume that if an employee is “salaried,” the employee is exempt from the minimum wage and overtime provision of the Fair Labor Standards Act (FLSA).  Generally, the FLSA requires employers to pay employees at least the federal minimum wage ($7.25) for the first 40 hours and overtime (1.5 times the regular rate of pay) for all hours worked over 40 hours in a workweek.  

Section 13(a)(1) of the FLSA creates several exemptions from the minimum wage and overtime requirements for certain “salaried” employees. Commonly referred to as the “salaried” exemptions (or the “white collar” exemptions), some salaried professionals do not have to be compensated based on hourly requirements.  In order to qualify for salaried exemption, however, the employee must meet very specific requirements.  Job titles or the amount of salary alone do not determine exempt status.  The employee’s specific job, salary and method of compensation all must meet the requirements for the exemption.

To qualify for an exemption from the FLSA, an employee must meet all the requirements in one of the following exemptions: executive, administrative, professional (learned or creative), outside sales, highly compensated employees, and certain computer and IT employees. Most of these categories have a specific salary level (a minimum salary the employee must be paid), a specific salary or fee basis (the way the employee must be paid or compensated), and specific job duties (responsibilities the employee must actually perform). 

One of the most common mistakes employers make is assuming an employee is covered under the administrative exemption when really the employee does not qualify.  Under the administrative exemption, the employee must meet all of the following requirements: 1) the employee must be compensated on a salary or fee basis at a rate of at least $455.00 per week, 2) the employee’s main job duty must be office or non-manual work related to management or general business operations of the employer or the employer’s customers; and 3) the employee’s main job duty includes the exercise of discretion and independent judgment with respect to matters of significance.  The last requirement often makes several employees, such as many secretaries, ineligible for the administrative exemption.  According to the Department of Labor, the employee is not exercising discretion and independent judgment if the employee’s job involves “applying well-established techniques, procedures, or specific standards described in manuals or other sources, clerical or secretarial work, recording or tabulating data, and performing mechanical, repetitive, recurrent or routine work.” The employee must have the opportunity to weigh options and make decisions or recommendations, even if those decisions can be reviewed by a higher level employee or manager.  

Whether or not an employee is exempt depends on the employee’s actual job duties.  For example, a human resource employee may fall under the administrative exemption if the employee actually formulates, interprets, or implements employment policies.  In contrast, personnel clerks who “screen” applicants to determine if the applicants meet predetermined minimum qualifications generally are not exempt as administrative employees. 

Certain workers cannot qualify for any of these exemptions and are entitled to minimum wage and overtime pay, regardless of the workers’ salary levels. For example, non-managerial blue collar workers and first responders cannot be exempt from the FLSA. Examples of blue collar workers are production, maintenance, construction, carpenters, electricians, plumbers, and etc.  Examples of first responders are police, firefighters, paramedics, correctional officers, probation officers, park rangers, and etc. 

It is very important for businesses and employers to ensure they follow all of the requirements of the FLSA since violations of the FLSA can subject the employer to liability for back wages and damages, criminal sanctions (up to $10,000 for the first violation and possible imprisonment on the second violation), and civil sanctions (up to $1,100 per violation). 

For questions about the FLSA, exemptions, and whether your business is in compliance, please contact Emily Macheski-Preston at Coleman Talley LLP by phone (229) 242-7562 or e-mail at [email protected].  Emily is a litigation attorney with Coleman Talley LLP and practices in employment law (including civil rights and workers’ compensation), local government law, and civil defense.  Celebrating its 75th anniversary and with 28 attorneys, Coleman Talley LLP is one of the largest and oldest full-service law firms in South Georgia.  

About Emily Macheski-Preston

Emily Macheski-Preston is an attorney at Coleman Talley LLP practicing in the areas of employment law, civil litigation, and local government law.