Common Exemptions for Salaried Employees

Posted in on March 12, 2024

Under the Federal Fair Labor Standards Act (“FLSA”), an employee is considered exempt from overtime pay if they meet certain requirements. First, the employee needs to be paid on a salary basis. Second, the employee must be paid at least the designated minimum weekly salary. Currently, this is at $684 per week under the FLSA (and may be higher depending on the state and county where the worker is located). Lastly, an employee must perform certain duties, with the most common exempt duties being classified as executive, administrative, and professional duties.

Employers most often incorrectly classify employees based on the duties portion of the exemption test. Below is a summary of the basic requirements of each of these three common exemption types:

Executive Exemption: The employee must focus mainly on managing the business or managing a recognized department or subdivision of the business or enterprise. This also requires an employee to customarily and regularly direct the work of at least two other full-time employees or the equivalent thereof (for example, four part-time employees), and the employee must be able to and have the authority to hire and fire other employees or their input must be given significant weight in hiring and firing decisions.
Administrative Exemption: The employee’s main duty must be focused in an office or on non-manual work related to the management or business operations of an employer or an employer’s customers. The employee’s primary duties also must include the practice of discretion and independent judgment with respect to matters of significance related to the business.
Professional Exemption: There are two sub-types under the professional exemption. The first one is the learned professional exemption. In order to qualify for the learned professional exemption, the employee needs to have advanced knowledge in a field of science or a field of intellectual study that must have been acquired by a course of specialized instruction. Examples of this are doctors, lawyers, and scientists. The second type of professional exemption is called the creative professional exemption. In order to qualify for the creative professional exemption, the employee must be engaged in work that requires invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. Examples of this include artists, actors, and musicians.

In each of the above examples, a case-by-case analysis must be done to determine if an employee truly fits into one of the exemption categories. The consequences of misclassification are serious, as it is considered a violation of the FLSA and the Massachusetts Wage Act, entitling employees to triple damages on the unpaid wages and overtime. In addition, the employer may also be subject to significant penalties and fines by the Attorney General’s Office and have to pay the employee’s attorneys’ fees. If you have questions about exempt employee status, as either an employee or an employer, reach out to one of the employment law attorneys at Baker, Braverman & Barbadoro, P.C. today for a consultation.