Exempt employee definition

Exempt employees are defined by the Fair Labor Standards Act (FLSA) as those not eligible for minimum wage or overtime compensation. Unlike hourly workers, they receive a salary, typically because their roles are specialized or managerial. Essentially, despite longer hours, they don’t get overtime pay due to their professional status.

Types of exempt employees

In the working world, there are different types of employees. One key difference is between “non-exempt” and “exempt” employees. Exempt employees have special rules set by the Fair Labor Standards Act (FLSA). These rules are based on their job roles and how much they earn. There are various kinds of exempt employees, each with its own job responsibilities. The main types are:

• Executive Exemption:

• Manage a department, subdivision, or the entire enterprise.
• Supervise the work of two or more full-time employees or four part-time employees.
• Hold significant authority in hiring, firing, promoting, or delegating tasks.

• Administrative Exemption:

• Engage in office or non-manual work related to business or management operations.
• Exercise discretion and independent judgment in their decisions without frequent supervision.

• Professional Exemption:

• Occupy roles that necessitate specialized education for informed judgment.
• Typically possess a college degree or higher in their specific field.
• Often involve roles requiring creativity, artistic talent, or inventiveness.

• High Compensation Employees:

• Qualify under executive, administrative, or professional exemptions.
• Earn an annual salary of $50K or higher (as of January 2020).

• Computer Exemption:
• Professionals in computer roles like systems analysts, programmers, and computer engineers.

• Outside Sales Exemption:

• Primarily operate away from the office or main business location.
• Responsibilities predominantly involve obtaining orders, contracts and executing sales.

How do you classify exempt employees?

Classifying exempt employees involves specific criteria. Firstly, they’re paid a salary, not by the hour, and their monthly pay exceeds the FLSA threshold, regardless of weekly working hours. This threshold adjusts annually; for instance, in 2023, employers must pay employees a salary of at least $200 per week. Those earning below this are “non-exempt.” Besides meeting the salary criterion, an employee’s job duties must align with the defined responsibilities for each exempt type.

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