Confused by all the talk of Overtime rule changes for paying overtime? You aren't alone... It's a mess. After the Texas court determined the Dept. of Labor overtime rule changes was an overreach it put on hold a number of sweeping changes. It created a number of uncertainties for employers and employees alike when trying to determine which workers qualify for overtime pay, and which don't. Federal law under the FLSA dictates which employees are considered exempt from the rules and which are non-exempt. This presentation explains some of the important tests you can apply to help classify whether employees are exempt or not. However, don't pretend this presentation is all you need to simplify what is a complicated case-by-case determination. State laws further complicate the matter, with many across the country supplementing federal law and providing additional protections in the workplace. Employment law will continue to be tricky business, so if you find yourself in an employment situation of your own. Be sure to reach out and connect with a qualified labor lawyer to get the answers you need.

1. [DATA SNAPSHOT]
Employee Exemptions
(FLSA Coverage Explained)

2. Classifications Of Employees
Employees whose jobs are governed by
the FLSA are considered either exempt
or non-exempt – depending on an
employees salary, how they get paid and
the type of work they do.

3. Exclusions From FLSA Coverage
There are 2 general types of complete
exclusions from FLSA coverage:
a) Those specifically excluded in the statute
itself
b) Those which are governed by some other
specific federal labor law

4. Employee exclusion examples:
• Workers employed in amusement or
recreational establishments,
organized camps, or non-profit
educational conference centers
• Workers employed in catching, taking,
harvesting, farming of any kind of fish,
shellfish, or seaweeds
• Workers employed in agriculture
Exclusions From FLSA Coverage

5. Employee exclusion examples:
• Workers employed in publication of
any weekly, semiweekly, or daily
newspaper
• Workers employed as a seaman on a
vessel other than an American vessel
• Workers employed in babysitting
services
Source: §213 of the FLSA
Exclusions From FLSA Coverage
List of FLSA exclusions can be found in §213 of
the FLSA

6. • truck drivers (governed by the Motor Carriers Act)
• most railroad workers
• etc.
Source: The Motor Carrier Exemption
Exclusions From FLSA Coverage
The Motor Carrier Exclusion
Examples of employee types that are
governed by some other specific
federal labor law:

7. Non-Exempt Employees
Under the FLSA, non-exempt employees
are entitled to overtime pay (for work
more than 40 hours in a week).
For overtime, employers must pay one-
and-a-half times the employees regular
rate of pay.

8. Exempt Employees
Under the FLSA, some employees (work
duties) are exempt from overtime
requirements.
Examples of exemptions: executive,
administrative, and professional
employees, outside sales employees, in
certain computer-related occupations
and so on.
Source: Fact Sheet #17A (Exemptions)

9. Exempt Employees
In order to be exempt, employees must
meet all three “tests”:
a) must be paid a certain amount
b) must be paid on a salary basis
c) perform exempt job duties
The 3 Tests Used To Determine Exemptions

10. Salary Level Test: The Final Rule
The Final Rule focuses primarily on
updating the salary and compensation
levels needed for executive,
administrative and professional workers
to be exempt.

11. Key points of the Final Rule:
• Sets the standard salary level at
$913 per week (previously $455)
• Sets HCE (highly compensated
employees) total annual
compensation requirement to
$134,004 per year (previously
$100,000)
Future automatic updates to those thresholds will
occur every 3 years, starting on January 1, 2020.
Source: Fact Sheet: Final Rule
Salary Level Test: The Final Rule

12. The Final Rule was judged invalid Aug. 31, 2017. The
Dept. of Labor has filed a notice to appeal. TBD.
Source: DOL.gov
Final Rule: Overtime (Recent Update)

13. Current Salary Level Test Rule
For now, the current rule’s salary
threshold remains in place: $23,660
(or $455 per week) and at least
$100,000 for HCEs (Highly Compensated
Employees).

14. Salary Basis Test
Generally, if an employee has a
“guaranteed minimum” amount of pay
for any work week, this job is salary
based.
This amount need not to be the entire
compensation received and it’s not
affected by whether pay is accumulated
in hourly terms.

15. Salary Basis Test
• The FLSA salary basis test applies only
to reductions in monetary amounts
• With some exceptions, the base pay
of a salary basis employee may not be
reduced based on the “quality or
quantity”

16. The Duties Test
Here, the actual job tasks (duties
performed) are important and not job
titles or position descriptions.
There 3 categories of exempt job duties:
• executive
• administrative
• professional

17. Executive job duties are exempt
if the employee:
• Regularly directs the work of at
least 2 or more other full-time
employees, and also
• Has management as the primary
duty of the position, and also
• Must have the authority to hire,
fire or exercise any other change
of status other employees
Executive Classification (Management)

18. A list of typical management
duties includes, but is not
limited to such activities as:
• Interviewing, selecting and
training employees
• Setting and adjusting their rates
of pay and hours of work
• Directing the work of employees
• Handling employee complaints
Executive Classification (Management)

19. A list of typical management
duties includes, but not is
limited to such activities as:
• Appraising employees’
productivity and efficiency
• Determining the techniques, the
type of materials, supplies, tools
to be used or merchandise to be
bought
• Planning and controlling the
budget
Executive Classification (Management)
Source: Fact Sheet #17B: Exemption for Executive Employees

20. Professional Classification
The employee’s primary duties must be
predominantly intellectual, requires
specialized education, and includes work
with exercise of discretion and
judgment.
The advanced knowledge must be in a
field of science or learning.
Classification as Professional:

21. Examples of the exempt “learned
professions”:
• lawyers
• doctors
• teachers
• pharmacists
• accountants (but not
bookkeepers)
• clergy
• etc.
Professional Classification
Source: Fact Sheet #17D: Exemption for Professional Employees

22. Creative professional exemption:
• Their primary duty of work must
require invention, imagination,
originality or talent
• It applies to jobs such as actors,
musicians, composers, writers,
cartoonists and so
• Whether the exemption applies
must be determined on a
case-by-case basis
Professional Classification

23. This type of exemptions is designed for relatively high-
level employees whose main job is to “keep the business
running.”
Administrative employees provide “support” to the
operational and production employees.
Administrative Classification
Source: Fact Sheet #17C: Exemption for Administrative Employees

24. Work directly related to “general
business operation” includes, but
is not limited to:
• finance
• tax
• advertising
• purchasing
• insurance
• labor relations
• human resources
• employee benefits
• etc.
Administrative Classification

25. All of the following tests must
be met:
• Their primary duty must be
making sales, or obtaining orders
or contracts for services
• The employee must be regularly
engaged away from the
employer’s place
Outside Sales Exemption

26. Police, Fire Fighters,
Paramedics & Other First Responders
The exemptions do not apply to…
• police officers
• detectives
• investigators
• park rangers
• fire fighters
• paramedics
• rescue workers
• hazardous materials workers
• etc.
Source: Fact Sheet #17A

27. Additional Resources
Additional Resources
Resource Link
Wage and Hour Division (WHD): Overtime Pay https://www.dol.gov/whd/overtime_pay.htm
Overtime Pay: Fact Sheets (By Exemption, By
Occupation) https://www.dol.gov/whd/overtime/fact_sheets.htm
Reference Guide to The FLSA https://www.dol.gov/whd/regs/compliance/hrg.htm
Title 29 - labor https://www.ecfr.gov/

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