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The FLSA Cheat Sheet

The Fair Labor Standards Act made easy.

The Fair Labor Standards Act is major piece of legislation that governs numerous workplace standards and compliance measures. This Cheat Sheet simplifies the FLSA for you by breaking it all down in one place. We suggest bookmarking this page for easy access.

 

About this Guide

The FLSA determines too many workplace standards for any mere mortal to remember. So we've created the FLSA Cheat Sheet to serve as an all-in-one quick reference guide that's easy to access and doesn't spare any of the details. Here's what's included:

Overview & Standards

Employer's FLSA Exemption Guide (PDF)

Employer Checklists

Company Policy Templates

FLSA Support

 

 

 

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Overview & Standards

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record-keeping, and child labor  and several other workplace standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. Use the accordion menu below to navigate all the standards quickly and easily.

 

Basic Accommodations

Applicability
The Fair Labor Standards Act (FLSA) applies to:

  • Employees of any enterprise engaged in interstate commerce (this is defined very broadly);
  • Employees of any enterprise engaged in the production of goods for interstate commerce; or
  • Employees of an enterprise with annual revenues exceeding $500,000.

Overtime
Unless exempt from the Act, the FLSA requires that employees be paid at least the federal minimum wage and an overtime premium of 1.5 times their regular rate of pay for all hours worked over 40 in one workweek. Employers must pay higher state or municipal minimum wages if they exist. An employee's "regular rate of pay" may include more than their base hourly wage. See the FLSA overtime page or search "regular rate of pay" for additional information.

Lactation Accommodations
Employers are required to provide reasonable break time for an employee to express breast milk for their nursing child for one year after the child’s birth each time such employee has need to express the milk. Employers must provide a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk. Some state laws that provide greater protections to employees. Employers are not required to pay nursing mothers for breaks taken for the purpose of expressing milk, but an employee’s normal break time can be used for this purpose in the same way that other employees are compensated for break time. Employers with fewer than 50 employees may be exempted from this provision if they can show that providing such accommodations would create an undue hardship. A successful claim of undue hardship requires a showing of significant difficulty or expense; employers should not rely on this as a defense to not providing accommodation unless they have consulted with an attorney.

Child Labor
The FLSA also regulates the employment of youth. 

Jobs Youth Can Do: 

  • 13 or younger: baby-sit, deliver newspapers, or work as an actor or performer 
  • Ages 14-15: certain permitted in such establishments as office work, grocery store, retail store, restaurant, movie theater, and amusement parks 
  • Age 16-17: Any job not declared hazardous 
  • Age 18: No restrictions 

Youth ages 14 and 15 may only work the following hours/durations: 

  • Between 7 am and until 7 pm (hours are extended to 9 pm June 1–Labor Day); 
  • Up to 3 hours, including Fridays on a school day; up to 18 hours in a school week; 
  • Up to 8 hours on a non-school day; up to 40 hours in a non-school week 

Different rules apply to youth working in agriculture. 

Many states have stricter child labor laws than the FLSA - the strictest standard will always apply.

Basic Wage Standards

Covered, nonexempt workers are entitled to a minimum wage of $7.25 per hour effective July 24, 2009. Special provisions apply to workers in American Samoa and the Commonwealth of the Northern Mariana Islands. Nonexempt workers must be paid overtime pay at a rate of not less than one and one-half times their regular rates of pay after 40 hours of work in a workweek.

Wages required by the FLSA are due on the regular payday for the pay period covered. Deductions made from wages for such items as cash or merchandise shortages, employer-required uniforms, and tools of the trade, are not legal to the extent that they reduce the wages of employees below the minimum rate required by the FLSA or reduce the amount of overtime pay due under the FLSA.

The FLSA contains some exemptions from these basic standards. Some apply to specific types of businesses; others apply to specific kinds of work.

While the FLSA does set basic minimum wage and overtime pay standards and regulates the employment of minors, there are a number of employment practices which the FLSA does not regulate.

For example, the FLSA does not require:

  1. vacation, holiday, severance, or sick pay;
  2. meal or rest periods, holidays off, or vacations;
  3. premium pay for weekend or holiday work;
  4. pay raises or fringe benefits; or
  5. a discharge notice, reason for discharge, or immediate payment of final wages to terminated employees.

The FLSA does not provide wage payment or collection procedures for an employee’s usual or promised wages or commissions in excess of those required by the FLSA. However, some States do have laws under which such claims (sometimes including fringe benefits) may be filed.

Also, the FLSA does not limit the number of hours in a day or days in a week an employee may be required or scheduled to work, including overtime hours, if the employee is at least 16 years old.

The above matters are for agreement between the employer and the employees or their authorized representatives.

Administrative Exemption

To be properly classified as exempt an administrative employee must pass three tests: 

  1. They must perform certain specific duties, outlined below;
  2. They must be paid the minimum salary for exempt employees as designated by the Department of Labor (currently $455 per week);
  3. They must be paid on a salary basis, meaning they are paid the same amount every week regardless of how many hours they work, or the quantity or quality of their work.

Part 1 of the test is the hardest and employers often misclassify workers as exempt administrative employees when they don't actually qualify. In order to be exempt employees should pass the two-part duties test. If in doubt, it's safest to classify an employee as non-exempt and pay overtime when worked.

Administrative Employee Duties Test

  1. The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers. (This might include work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; government relations; computer network, Internet and database administration; legal and regulatory compliance; and similar activities.); and
  2. The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. (Consider whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; carries out major assignments in conducting the operations of the business; performs work that affects business operations to a substantial degree; has authority to commit the employer in matters that have significant financial impact; has authority to waive or deviate from established policies and procedures without prior approval.)
Biometric Timekeeping

In the timekeeping context, biometrics refers to the measurement of people’s physical characteristics and use of that information to track when they come and go from work. For instance, an employer could install a finger or hand scanner in lieu of a punch card or pen-and-paper tracking system. The unique advantage of a biometric timekeeping system is that employees cannot clock in or out for one another (“buddy punching”). 

Although the use of biometrics in timekeeping is on the rise, it’s still far from commonplace. Currently, laws specifically related to this practice in the employment setting are limited. However, employers considering the use of biometric timekeeping systems should be aware that the information collected is likely protected by privacy laws and should be stored with heightened security. Additionally, as the practice spreads we can expect to see more states drafting their own legislation on the issue.

Labor law experts commonly recommend that employers take the following steps if implementing a biometric timekeeping system:

  1. Inform employees in writing that biometric information will be collected.
  2. Explain the purpose for which the information will be used.
  3. Obtain the employee’s written and signed consent to use the information.
  4. Refrain from selling, trading, or in any way profiting from the information.
  5. Refrain from disclosing or disseminating the information unless you obtain the employee’s permission or disclosure of the information is required by law.
  6. Use, transmit, and store the information with at least the same amount of protection as other confidential and sensitive information.

Use the Biometric Date Collection and Use Notice and Consent Form linked on the left to provide employees with information about your practices and document their authorization.

Child Labor

Work Permits and Age Certificates

The Fair Labor Standards Act (FLSA) does not require work permits or age certificates for minors. Many states, however, do require them for workers of certain ages. The US Department of Labor (DOL) will issue age certificates if the minor employee's state does not issue them and the minor’s employer requests that they provide one.

The purpose of these certificates is to protect the employer from prosecution for employing an under-aged worker. Having an age certificate on file constitutes a good-faith effort to comply with minimum age requirements.

Wages

Unless a state requires a higher minimum wage, employees under 20 years old may be paid $4.25 for their first 90 consecutive calendar days of work.

Certain full-time students can be paid 85% of the minimum wage if the employer applies for a special certificate from the DOL, and allowed by state law. For additional information, employers can call the DOL at (312) 596-7195.

Posters

The FLSA requires employers to display the Minimum Wage Poster, which includes information regarding child labor.

Hours of Work

The FLSA has no restrictions on the hours of work for minors who are 16 or 17 years old.

Minors age 14 and 15 who are covered by the FLSA:

  • May not work during school hours
  • Can work no more than 8 hours in a day or 40 hours in a week when school is not in session
  • Can work no more than 3 hours in a day or 18 hours in a week when school is in session
  • Can work only between 7 a.m. and 7 p.m. during the school year. However, between June 1 and Labor Day, they may work between the hours of 7 a.m. and 9 p.m.

Prohibited Work for All Minors

Minors may not be employed in any of the following types of establishments or positions:

  • Working in or about plants or establishments manufacturing or storing explosives
  • Driving a motor vehicle or riding along the outside of a vehicle, with limited exceptions
  • Coal or other mining
  • Logging and sawmill operations, forest fire fighting and forest fire prevention operations, and timber tract and forestry service occupations
  • Work involving exposure to radioactive substances and to ionizing radiations
  • Wrecking, demolition, and ship-breaking operations
  • *Slaughtering or meat packing, processing, or rendering
  • Manufacturing brick, tile, or similar products
  • *Operating most heavy machinery and power tools
  • *Roofing operations and work on or about a roof
  • *Excavation operations

*In these occupations, a minor who is 16 or 17 may be employed as an apprentice or student learner.

An apprentice is defined as someone who is employed in a recognized apprenticeable trade; whose work is incidental to training; whose work is intermittent, short, and under close journeyman supervision; and whose work is registered or executed under a written agreement about work standards.

A student learner is defined as someone who is enrolled in an authorized cooperative vocational training program with a written agreement; whose work is incidental to training; whose work is intermittent, short, and under close supervision; who receives safety instructions from a school and employer; and who follows a schedule of organized and progressive work.

Allowed Work for Minors Age 14 or 15

Only the following occupations are allowed for minors who are 14 or 15 years old.

  • Retail occupations
  • Office or clerical work
  • Intellectual or creative work, such as computer programming, teaching, tutoring, singing, acting, or playing an instrument
  • Errands or delivery work by foot, bicycle, or public transportation
  • Clean-up and yard work that does not including using power-driven mowers, cutters, trimmers, edgers, or similar equipment.
  • Work involving cars or trucks, such as dispensing gasoline or oil or washing or hand polishing
  • Certain kitchen and food service work, including reheating food, washing dishes, cleaning equipment, and limited cooking
  • Cleaning vegetables and fruits, wrapping, sealing, and labeling, weighing, pricing, and stocking items when performed outside a freezer or meat cooler
  • Loading or unloading objects for use at a worksite, including rakes, handheld clippers, and shovels
  • Certain tasks in sawmills and woodshops if the minor meets specific requirements
  • 15 year olds can work as a lifeguard if they meet specific requirements

If an occupation is not specifically listed as permitted, then it is prohibited.

Prohibited Work for Minors Age 14 or 15

Federal law also lists activities that are specifically prohibited for minors who are 14 or 15 years old. Minors may not work in the following establishments or positions, even if they appear to be included in the Allowed Work list above.

  • Baking and cooking, with some exceptions
  • Machinery
  • Manufacturing or processing
  • Warehousing or storage
  • Boiler or engine rooms, including maintaining or repairing the establishment, machines, or equipment
  • Riding on a motor vehicle
  • Outside window washing from window sills
  • Using ladders, scaffolds, or their substitutes
  • In freezers or meat coolers
  • Preparing meat for sale, including catching or cooping poultry
  • Youth peddling and related activities
  • Loading or unloading goods or property on or from a motor vehicle, railroad car, or conveyor
  • Public messenger service
  • Transporting people or property
  • Communications and public utilities
  • Construction, including repair, except for office or sales work
  • Any job prohibited for all minors

Minors Under 14

Minors under 14 are not allowed to work, with limited exceptions, such as acting or performing, delivering newspapers, or working in agriculture. 

Commissioned Sales Employee Exemption

Commissioned employees in retail and sales establishments may be exempt from the overtime requirements of the FLSA if certain conditions are met. This exemption is different from the commonly used White Collar Exemptions. If a retail or service employer elects to use the overtime exemption for commissioned employees, three conditions must be met. 

Commissioned Retail or Sales Employee Exemption Test:

  1. The employee must be employed by a retail or service establishment; and
  2. The employee's regular rate of pay must exceed one and one-half times the applicable minimum wage for every hour worked in a workweek in which overtime hours are worked (e.g., if an employee works 43 hours they would need to make at least 1.5x minimum wage for all 43, not just the 3 that were overtime); and
  3. More than half the employee's total earnings in a representative period must consist of commissions.

The representative period for determining if enough commissions have been paid may be as short as one month,but must not be greater than one year. The employer must select a representative period in order to determine if this condition has been met. 

If the employee is paid entirely by commissions, or draws and commissions, or if commissions are always greater than salary or hourly amounts paid, the-greater-than-50%-commissions condition will have been met. If the employee is not paid in this manner, the employer must separately total the employee's commissions and other compensation paid during the representative period. The total commissions paid must exceed the total of other compensation paid for this condition to be met. To determine if an employer has met the "more than one and one-half times the applicable minimum wage" condition, the employer may divide the employee's total earnings attributed to the pay period by the employee's total hours worked during such pay period. If the result is greater than time and one-half the minimum wage, this condition of the exemption has been met. 

Hotels, motels and restaurants may levy mandatory service charges on customers which represent a percentage of amounts charged customers for services. If part or all of the service charges are paid to service employees, that payment may be considered commission and, if other conditions in section 7(i) are met, the service employees may be exempt from the payment of overtime premium pay. 

Typical Problems Regulations require that employers maintain accurate records of hours worked each workday, hours worked each workweek, and earnings and wages paid. Without hours worked and earnings records, the employer will be unable to substantiate that all conditions for the exemption have been met. In addition, the employer must select a representative period of at least one month, but not more than one year, which typifies the characteristics of the employee's earning pattern, in order to test whether the employee is paid principally by commissions.

Tips paid to service employees by customers may never be considered commissions for the purposes of this exemption.

Computer Employee Exemption

To be properly qualified as exempt a computer employee must pass three tests: They must perform certain specific duties; they must be paid the minimum salary for exempt employees as designated by the Department of Labor or at least $27.63 per hour; if they are paid a salary (rather than $27.63+ per hour), then they must be paid on a salary basis, meaning they’ll make the same amount every week regardless of how many hours they work, or the quantity or quality of their work.

Computer Employee Duties Test

The employee’s primary duty must consist of: 

  • The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
  • The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
  • The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or 
  • A combination of the aforementioned duties, the performance of which requires the same level of skills. 

The computer employee exemption does not include employees engaged in the manufacture or repair of computer hardware and related equipment. 

Executive Employee Exemption

To be properly qualified as exempt an executive employee must pass three tests: They must perform certain specific duties, they must be paid the minimum salary for exempt employees as designated by the Department of Labor, and they must be paid on a salary basis, meaning they’ll make the same amount every week regardless of how many hours they work, or the quantity or quality of their work.

Executive Employee Duties Test

  1. Primary duty is the management of an enterprise in which the person is employed or a customarily recognized department or subdivision; and
  2. Customarily and regularly directs the work of two or more full-time employees (or equivalent); and
  3. Has authority to hire, fire, or promote other employees or effectively recommend similar actions

Executive Management Behaviors

  •       Interviewing, selecting, and training of employees
  •       Setting and adjusting their rates of pay and hours of work
  •       Planning and directing the work of employees
  •       Appraising employees' productivity and efficiency
  •       Handling employee complaints and grievances
  •       Disciplining employees


Business Owners

A person – whether they are called a business owner or employee – who owns at least a bona fide 20% equity interest in the company, regardless of the type of business organization, and who is actively engaged in its management, is considered a bona fide exempt executive. 

Highly Compensated Employee Exemption

The Highly Compensated Employee (HCE) exemption applies to employees who perform a limited number of executive, administrative, or professional duties, but are so well compensated that they still qualify to be exempt as White Collar Employees.

To be properly classified as an exempt HCE an employee must meet all elements of this test:

  1. Primary duty includes performing office or non-manual work; and
  2. They customarily or regularly perform at least one of the exempt duties of an executive, administrative, or professional employee; and
  3. They are compensated at least $100,000 annually*; and
  4. They must be paid at least $455 per week on a salary basis, meaning they will make this amount every week regardless of how many hours they work or the quantity or quality of their work*

At the end of the year, if the employee has not been compensated at least $100,000, the employer may make up the difference in order to maintain the exemption. If the employer chooses not to pay the difference, they must calculate and pay out all of the employee's overtime for the previous year.

Lactation Accommodations

Under the Fair Labor Standards Act employers are required to provide reasonable break time for employees to express breast milk for their nursing child, as frequently as needed, for up to one year after the child’s birth. The number and length of breaks needed by employees will vary, but employers should expect that nursing mothers may need between two and four breaks of between 10 and 45 minutes per 8-hour workday. 

Employers are also required to provide a place that is shielded from view and free from intrusion from coworkers and the public. A bathroom, even if private, is not a permissible location under the Act. The location provided must be functional as a space for expressing breast milk. If the space is not dedicated to the nursing mother’s use, it must be available when needed in order to meet the statutory requirement. A space temporarily created or converted into a space for expressing milk or made available when needed by the nursing mother is sufficient.

The FLSA requirement of break time for nursing mothers to express breast milk does not preempt State laws that provide greater protections. State-specific regulations can be found by searching "Your State breastfeeding" in the universal search bar.

Federal Minimum Wage

The current federal minimum wage is $7.25 per hour. The current minimum wage for federal contractors who have services covered by the Service Contract Act, or concessions and services in connection with federal property or lands, is $10.35. Employees must be paid at least the federal minimum wage unless neither the organization nor the employee are covered by the Fair Labor Standards Act (FLSA). If a higher state or local minimum wage is in place, employers must pay the higher rate. State and local minimum wages often apply to all employers, even if they are not covered by the FLSA.

There are ways an organization or employee can be covered by the FLSA:

Enterprise Coverage

This applies to all businesses whose annual gross volume of sales or business done exceeds $500,000. In addition, the law specifically includes businesses engaged in the operation of a hospital or a facility which cares for and houses the elderly or people who have a physical or mental disability. The law also includes all schools and public agencies. If an organization has enterprise coverage, all of its employees are covered by the provisions of the FLSA.

Individual Coverage 

Even a business that is not covered under Enterprise may have individual employees who are covered under the provisions of the FLSA. If an individual is engaged in interstate commerce, production of goods for interstate commerce, handling or working on goods or materials that are moving in interstate commerce, or is involved in an occupation that is closely related or directly essential for the production of goods for interstate commerce, that employee is covered on an individual basis. The Individual category includes those who work in communications or transportation, or who regularly use the postal system or telephone for interstate communications. Even employees of the smallest businesses may be covered on an Individual basis. For example, individuals who accept checks and credit cards are involved in the interstate banking system and would probably be covered under the FLSA. The same is true for an individual who uses the U.S. Postal Service to ship or order goods anywhere outside the state's boundaries. 

The FLSA specifically exempts certain employees from minimum wage and/or overtime, including those holding the following positions:

  • Administrative, executive, professional, and outside sales employees
  • Casual babysitters
  • Companions for the elderly
  • Disabled workers, in some situations
  • Farmworkers on small farms
  • Federal criminal investigators
  • Fishing employees
  • Foreign employment
  • Homeworkers making wreaths
  • Newspaper delivery employees
  • Newspaper employees of limited circulation newspapers
  • Seamen on non-American vessels
  • Seasonal amusement or recreational establishment employees
  • Student learners, in some situations
  • Switchboard operators
  • Tipped employees—tipped employees must be paid at least $2.13 per hour as base pay. If $2.13 per hour and the tips the employee earns combined do not total at least $7.25 per hour, the employer must make up the difference.

Many states have a narrower list of exemptions from the minimum wage and/or overtime. Employers who plan to classify employees as exempt should check state law to ensure compliance. Many states also enforce a higher minimum base pay for tipped employees, or disallow tip credits altogether, making this another area where it is important for employers to be familiar with state law.

Ministerial Exemption
Some church employees, particularly clergy and pastors, may qualify for the ministerial exemption. This would make them exempt from both minimum wage and overtime requirements.

Unfortunately, there is no hard and fast rule for when this exemption will apply, but the Supreme Court has supported the “functional approach” taken by a number of Courts of Appeal. The functional approach focuses not on the percentage of time spent on secular versus religious activities, but rather on the role played by the employee in conveying the church’s message and carrying out its mission. If the employee plays an important role as an instrument of the church’s religious message or leader of worship, they will likely qualify for the exemption. 

Teachers in religious schools may or may not qualify for this exemption. However, if they do not it is still very possible that they are exempt white collar employees who are not subject to the minimum salary for exempt employees or the salary basis pay requirement. See the Professional Exemption for additional information on teachers.
Miscellaneous Exemptions

The Fair Labor Standards Act enumerates the following positions and industries that are exempt from overtime requirements. States that have their own wage and hour laws may not recognize many of these exemptions, in which case employers should pay overtime in accordance with state law.

  • Agricultural Employees. The are a number of ways in which an agricultural employees can be exempt. Employees are exempt if they are primarily employed during their work week in agriculture and are not paid less than the minimum wage. Agricultural employees are also exempt if:
    1. They are employed by an employer who did not, during any calendar quarter in preceding calendar year, use more than 500 man-days of agricultural labor; or
    2. They are the parent, spouse, child, or other member of the employer’s immediate family; or
    3. If they are a hand-harvest laborer paid on a piece rate basis who commutes to the farm daily and has been employed in agriculture for less than 13 weeks in the preceding calendar year; or
    4. If they are age 16 or under and employed as a hand harvest laborer paid on a piece rate basis and is employed on the same farm as his/her parent and is paid the same piece rate as employees over 16 are paid; or
    5. If they are principally engaged in the range production of livestock.
  • Agricultural Ditches
  • Amusement and Recreational Establishments, Organized Camp, and Religious or Nonprofit Educational Conference Centers (If operating fewer than seven months per year, or if revenue during peak months and non-peak months meets certain requirements)
  • Dairy Buyers
  • Farm Operation Products
  • Fruit/Vegetable Transportation
  • Maple Sap
  • Cotton ginning/sugar cane/sugar beet
  • Newspaper
  • Newspaper delivery
  • Switchboard operators of independently-owned public telephone companies with fewer than 750 stations.
  • Seafood Industry
  • Domestic Service
  • Transportation
  • Drivers and driver’s helper's compensated on trip rates
  • Taxi drivers
  • Rail and air common carriers
  • Radio and Television
  • Mechanics and related jobs
  • Recreational vehicle sales
  • Institutions serving orphans
  • Forestry
  • Wreath makers
  • Employees who work in foreign countries
  • Petroleum distributors
  • Firefighters and law enforcement
  • Learners
Outside Sales Employee Exemption

To be properly qualified as exempt an outside sales employee must pass the duties test. Unlike other white collar exemptions under the FLSA, outside sales employees are not subject to the minimum salary requirements, nor the salary basis test. As long as they pass the duties test they may be properly classified as exempt.

Outside Sales Employee Duties Test

  1. Employee's primary duty must be making sales or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and 
  2. The employee is customarily and regularly engaged away from the employer’s place or places of business

“Customarily and regularly” means the activity is more than occasional but doesn’t necessarily need to be constant. It includes work that’s normally done on a weekly basis, but doesn’t include one-time or infrequent tasks. A number of states have a specific percentage that they apply to this element of the test. For instance, employees in Oregon must spend at least 70% of their time engaged in those activities, whereas California employees must spend 50%. 

“Away from employer’s place of business” means the employee is at the customer's office or job site, or selling door-to-door. This doesn’t include sales by mail, phone or internet. Most importantly, any fixed location used by an outside sale employee as a headquarters – like their own home office, or a satellite office – will be considered the employer’s place of business. So, if they don’t “customarily and regularly” make it out of their home office, they won’t qualify for this exemption.

Professional Exemption

To be properly qualified as exempt a professional employee must pass three tests: They must perform certain duties, they must be paid the minimum salary for exempt employees as designated by the Department of Labor, and they must be paid on a salary basis, meaning they’ll make the same amount every week regardless of how many hours they work, or the quantity or quality of their work.

There are two kinds of professional employee exemption. Employees only need to qualify for either Learned or Creative to be exempt.

Learned Professional 

  1. The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; and
  2. The advanced knowledge must be in a field of science or learning; and
  3. The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction (usually an advanced degree, such as a Master’s, JD, MD, or PhD)

Work Requiring Advanced Knowledge
“Work requiring advanced knowledge” means work which is predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment. Professional work is therefore distinguished from work involving routine mental, manual, mechanical or physical work.  A professional employee generally uses the advanced knowledge to analyze, interpret or make deductions from varying facts or circumstances.  Advanced knowledge cannot be attained at the high school level.

Field of Science or Learning
Fields of science or learning include law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, various types of physical, chemical and biological sciences, pharmacy and other occupations that have a recognized professional status and are distinguishable from the mechanical arts or skilled trades where the knowledge could be of a fairly advanced type, but is not in a field of science or learning.

Customarily Acquired by a Prolonged Course of Specialized Intellectual Instruction

The learned professional exemption is restricted to professions where specialized academic training is a standard prerequisite for entrance into the profession. The best evidence of meeting this requirement is having the appropriate academic degree. However, the word “customarily” means the exemption may be available to employees in such professions who have substantially the same knowledge level and perform substantially the same work as the degreed employees, but who attained the advanced knowledge through a combination of work experience and intellectual instruction.  This exemption does not apply to occupations in which most employees acquire their skill by experience rather than by advanced specialized intellectual instruction.

Teachers
Teachers are exempt if their primary duty is teaching, tutoring, instructing or lecturing in the activity of imparting knowledge, and if they are employed and engaged in this activity as a teacher in an educational establishment. Exempt teachers include, but are not limited to, regular academic teachers; kindergarten or nursery school teachers; teachers of gifted or disabled children; teachers of skilled and semi-skilled trades and occupations; teachers engaged in automobile driving instruction; aircraft flight instructors; home economics teachers; and vocal or instrument music teachers. The salary and salary basis requirements do not apply to bona fide teachers. Having a primary duty of teaching, tutoring, instructing or lecturing in the activity of imparting knowledge includes, by its very nature, exercising discretion and judgment.

Practicing Doctors and Lawyers
An employee holding a valid license or certificate permitting the practice of law or medicine is exempt if the employee is actually engaged in such a practice. An employee who holds the requisite academic degree for the general practice of medicine is also exempt if he or she is engaged in an internship or resident program for the profession. The salary and salary basis requirements do not apply to bona fide practitioners of law or medicine.

Creative Professional 

The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Exemption as a creative professional depends on the extent of the invention, imagination, originality or talent exercised by the employee. Whether the exemption applies must be determined on a case-by-case basis. The requirements are generally met by actors, musicians, composers, certain painters, cartoonists, and novelists. Be wary of applying this exemption to an employee whose artistic expression is limited by the scope of their tasks. For instance, a graphic designer who spends their time making PowerPoint presentations for jury trials probably would not qualify for this exemption, since a different graphic designer given the same task would likely produce a very similar product.

White Collar Overtime Exemptions
To be exempt from the FLSA under a White Collar Exemption (Executive, Administrative, Professional, Outside Sales, Computer, Highly Compensated Employee), an employee must generally pass these three tests. They must:
  1. Perform certain duties in accordance with the particular exemption being applied (duties test); and 
  2. Make at least the weekly amount designated by the Department of Labor for White Collar Employees, which is currently $455 per week (salary level test); and
  3. Be paid on a salary basis, meaning they are paid on a weekly or less frequent basis and the amount paid will not vary depending on quantity or quality of work produced or on the number of hours actually worked (salary basis test)

Deductions from Exempt Employees’ Salary

Making certain deductions from an exempt employee’s salary may put the exemption at risk; this is because the effect of the deduction is that the employee is being compensated on an hourly rather than salary basis. The Department of Labor has been quite clear about when deductions are permissible or prohibited.

Prohibited Deductions:

  • Partial day absences
  • Absence is caused by the employer, e.g. a lack of work to be done, significant remodeling preventing use of the office (and work cannot be done remotely), early office closures on a holiday weekend;
  • Absences caused by jury duty, attendance as a witness, or temporary military leave, unless the employee performs no work in the entire workweek (however, an employer may take an offset for any amount the employee receives from the government for these duties, e.g. $15 per day for jury duty)

Allowable Deductions:

  • Unpaid FMLA or medical leaves
  • Disciplinary suspensions of one or more full days in accordance with the company discipline policy for major safety infractions
  • Disciplinary suspensions of one or more full days in accordance with the company discipline policy for violating workplace rules. (Several states do not allow this, included CA and CT. Check state regulations.)
  • Partial weeks in the first and last weeks of employment
  • Full day absences for personal reasons
  • Full day absences for sickness or disability if the employer offers a bona fide paid leave plan 

Bona Fide Sick Leave Plan

A “bona fide” sick leave plan is a paid sick leave benefit provided to employees in the case of absence from work due to illness, injury, or disability. This time can be called sick leave, paid time off (PTO), or vacation; the name of the benefit is not important, as long as that time can be used for illness, injury, or disability. The parameters of a plan that qualifies as "bona fide" have been laid out in Department of Labor opinion letters, which have been responses to fact-specific inquiries from unique employers. However, the following requirements are considered to be well-established:

  • Plan provides at least five days per year
  • Sick leave benefits are well-defined
  • Benefits have been communicated to eligible employees
  • Plan operates as described
  • Plan is administered impartially
  • Plan is not designed to evade the requirements that exempt employees be paid on a salary basis

In Case of Improper Deduction

If a deduction is improperly made, the federal regulations provide for a window of correction. This window allows for the correction of an inadvertent deduction if an employee is promptly and fully reimbursed for it. Corrections should be made as soon as possible after an improper deduction is discovered. In order to take advantage of this window of correction (or "safe harbor") the employer must have a clearly communicated policy prohibiting improper pay deductions and providing a complaint mechanism. Employers must then reimburse employees for any improper deductions and make a good faith commitment to comply in the future. If this policy is provided and these steps follow, the employer will not lose the exemption as a result of improper and inadvertently deductions. An employer will incur liability if it repeatedly and willfully violates its own policy, or if it has an actual practice of noncompliance across a department or division. 

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Additional Resources

A PDF Guide, 2 checklists and 3 policy templates that can be used to update your employee handbook. Employers must take many strategic steps to ensure they're in compliance with the FLSA. These tools make it easier. Click on any of the links below for a free download.
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Employer's FLSA Exemption Guide

The FLSA determines when overtime must be paid to an employee. This Guide explains those exemptions and includes a flow chart to help determine an employee's status.

Download

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Exempt vs. Non-Exempt Employee Checklist

Use this checklist as an introduction to the federal employment classifications as defined in the Fair Labor Standards Act and a resource to help determine an employee's exemption status.

Download

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Wage and Hour Checklist

This checklist will walk you through the process of auditing your current pay practices to ensure you are following all applicable wage and hour laws.

Download

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Timekeeping Policy Template

Use this template to update your company timekeeping policy in your employee handbook. This is useful to establish consistency and for newly non-exempt employees.

Download

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Employment Classifications Policy Template

Use this template to update your employment classifications policy in your employee handbook. This helps employees understand how (and why) they are classified.

Download

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Off-the-Clock Work Policy Template

Use this template to update your company's off-the-clock work policy in your employee handbook, which is critical for newly non-exempt employees.

Download

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FLSA Support

Answers and More Resources

Complete Payroll helps thousands of clients throughout the country with payroll processing, human resources, timekeeping and labor law compliance every day. Complete the form below and someone from our team will get back to you within 1 business day to answer any questions you may have and direct you to more resources about the Fair Labor Standards Act.

 

 
The materials and information available at this website and included in this blog are for informational purposes only, are not intended for the purpose of providing legal advice, and may not be relied upon as legal advice.  The employees of Complete Payroll are not licensed attorneys. This information and all of the information contained on this website are provided pursuant to and in compliance with federal and state statutes. It does not encompass other regulations that may exist, including, but not limited to, local ordinances.  Complete Payroll makes no representations as to the accuracy, completeness, currentness, suitability, or validity of the information on this website and does not adopt any information contained on this website as its own. All information is provided on an as-is basis. Please consult Complete Payroll or an attorney to obtain advice with respect to any particular question or issue.

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