“White Collar” Exemptions under the FLSA

November 12, 2010

As our Anaheim, California employment attorneys have previously discussed in a blog, the classification of "exempt" or "non-exempt" employees is an important issue in the workplace as employee misclassification can lead to the violation of state and federal wage and hour laws.

According to the Fair Standards Labor Act (FLSA) and California law, most non-exempt employees are entitled to overtime compensation, at the rate of one and a half (1 ½) times their regular hourly pay rate when they work over 40-hours in a work-week.

For "exempt" employees, the FLSA provides exemptions from both overtime payment and minimum wage, for administrative, professional, and executive employees, as well as outside sales and some computer employees. These are considered "white collar" exemptions, and under the FLSA, to qualify for a white collar exemption, employees must meet certain criteria regarding their employment duties.

Under the FLSA and California law, job titles do not determine exemptions--whether an employee is "exempt" or "non-exempt" depends on an employee's specific job responsibilities.

Executive exemptions usually apply to managers at a high level whose primary duty is to control or oversee integral aspects of the company's enterprise. The manager must regularly oversee the work of at least two or more full time employees, with the authority to hire or fire other employees. The Executive employee's recommendations must also hold particular authority as to the hiring, termination, advancement, promotion, or other change in a worker's status. Executive employees must be compensated on a salary or fee basis, with a payment of no less than $455 a week.

Professional exemptions usually apply when the employee's primary work responsibilities include a specific and advanced knowledge in the area of science or learning, acquired by a course of specialized instruction that is predominately intellectual in character and requires the use of judgment and discretion. Creative professional exemptions would apply to an employee who has the primary duty of performing work that requires creativity, originality, invention, or talent in a recognized field or artistic endeavor. Professional employees must be compensated on a salary or fee basis, with a payment of no less than $455 a week.

Administrative exemptions cover employees whose primary responsibilities include performing office or non-manual work that is directly related to the management or operations of the business of the employer or the employer's customers, with the primary duty of exercising discretion and independent judgment with respect to specific matters regarding the company's business. Administrative employees must be compensated on a salary or fee basis, with a payment of no less than $455 a week.

Highly compensated employees who earn a yearly sum of $100,000 or more performing non-manual or office work, or who consistently perform at least one of the duties of the executive, professional, or the administrative employee are also exempt from the FLSA's overtime and minimum wage requirements. These employees must be also compensated on a salary or fee basis, with a payment of no less than $455 a week.

Computer Employee exemptions must also be compensated on a salary or fee basis, and paid no less than $455 a week, unless the employee is hourly, in which case the employee should be paid at a rate no less than $27.63 per hour. The employee must be a computer programmer, systems analyst, software engineer, or similarly skilled in the computer field dealing with machine operating systems, creating computer programs, design, or similar responsibilities, as long as the job performance requires the same level of skills.

For Outside sales employee exemptions, the employee's primary responsibilities must be making sales, or obtaining orders or contracts for services for the company, for which a consideration will be paid by the customer or the client. This business must be regularly engaged away from the employer's establishment of business.

As we reported recently in a blog, if an employee has been improperly classified as "exempt," from receiving wage and hour benefits that are usually available to "non-exempt" employees, he or she may be entitled to overtime compensation and back wages. Contact our Orange County, California employment attorneys today, at Howard Law, PC, for more information about your employment rights.

DOL's Fairpay Overtime Initiative, The U.S. Department of Labor (DOL): Wage and Hour Division (WHD)

Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA), The U.S. Department of Labor (DOL): Wage and Hour Division (WHD)

Elaws: Fair Labor Standards Act Advisor, The U.S. Department of Labor (DOL): Wage and Hour Division (WHD)

Related Web Resources:

U.S. Department of Labor: Wage and Hour Division (WHD), Fair Labor Standards Act (FLSA)