CLASSIFYING EMPLOYEES FOR WAGES
a general proposition, employers are required by federal law to pay their
employees overtime, usually one and one‑half times the hourly pay, for time in
excess of 40 hours in a work week. They are also required to pay the minimum
wage, which is currently $7.25 an hour.
first four groups of employees that are “exempt” from having these rights are
executive, administrative, and professional personnel and outside salespersons.
For any of the first three exemptions, collectively called the “white collar
exemptions,” to apply, the employee must receive, on a salaried basis, at least
$455 per week or its equivalent.
commonly invoked exemption is for skilled computer operators who are
compensated at a rate of not less than $27.63 per hour. The following is an
overview of these exemptions, but be forewarned that pertinent regulations
contain many exceptions and qualifications that must be consulted before an
employer can be assured of having complied with applicable federal law.
Exempt Groups of Employees
be an exempt “executive,” the employee:
1) Must have, as a primary duty,
management of the enterprise or of a customarily recognized department or
division of the enterprise;
2) Must customarily and regularly direct at least
3) Must have hire‑and‑fire authority as to other employees,
or at least be someone whose suggestions and recommendations as to such matters
are given particular weight.
exempt “administrative” employee is one whose primary duty is the performance
of office or non-manual work directly related to the management or general
business operations of the employer or its customers, and whose primary duty
includes the exercise of discretion and judgment with respect to significant
matters. Discretion and judgment are distinguished from skill. For example,
clerical workers are typically not exempt as administrative workers. As you
might expect, “matters of significance” is a highly elastic concept, but just a
few of the many illustrative examples are accounting, quality control, employee
benefits, and legal and regulatory compliance.
“professional” exemption can apply to individuals in any of four groups:
learned professionals, who do work in a field requiring advanced knowledge
customarily acquired by a prolonged course of specialized intellectual
instruction; creative professionals, whose work requires invention,
imagination, originality, or talent in a recognized artistic or creative field;
teachers, including preschool and trade school teachers, athletic coaches, and
advisors for school activities; and doctors and lawyers holding licenses or
specialized exemption for “computer employees” comes into play when an employee
has primary duties consisting of the application of computer systems analysis
techniques and procedures, or the design, development, documentation, analysis,
creation, testing, or modification of computer systems or programs.
exempt “outside salesperson” is generally an employee whose main duty is making
sales or obtaining orders or contracts for services or for the use of
facilities, and who is customarily and regularly employed away from the
employer’s place of business.
the detailed federal requirements for the exemptions from overtime and minimum
wage requirements is a complex business, and the consequences for violating the
Fair Labor Standards Act, from which they emanate, can consume lots of time and
money. The stakes for getting this right may be even higher now, in light of an
announcement by the Department of Labor that it plans to give increased
attention to the problem of mis-classification of employees.
extensive, sometimes highly specific federal requirements for the wage‑and‑hour
exemptions, not to mention their state law counterparts, are best analyzed and
applied by employers in consultation with experienced legal advisors or human