Focus on the White-Collar Exemptions

The so-called white-collar exemptions (executive, administrative, and professional) are often difficult to apply to real-life situations. One has to understand that those exemptions come with both salary and duties tests and that the exemptions follow certain underlying principles.

Quick Basics

  1. The executive, administrative, and professional exemption categories each have a salary test (minimum salary is $684/week; computer professionals can be paid $27.63/hour or more in straight-time pay for each hour worked in lieu of the minimum salary) and a duties test.

  2. Up to 10% of the salary can consist of non-discretionary bonuses or commissions.

  3. Employees who meet the tests for their categories do not have to be paid overtime pay, regardless of how much overtime they work.

  4. A salary alone does not make an employee exempt.

  5. A title alone does not make an employee exempt.

  6. Generally, exempt employees are the most important, highest-ranking, or highest-skilled workers in the company.

  7. Exempt employees are the ones to whom the non-exempt workers look for leadership, supervision, and other forms of guidance.

  8. Exempt employees all have a great deal of discretion and independent judgment in how they do the details of their jobs, meaning that to a large extent, they are "standalone" employees.

  9. It is practically impossible to standardize the work of an exempt employee with respect to time.

  10. They are not treated as hourly employees, i.e., the emphasis is not on the exact number of hours they work, but rather on whether they are completing their projects or managing their departments properly.

  11. An employer hiring exempt employees is basically buying "results", whether the result is a better-run company, projects being managed to completion on time, departments being efficiently managed, or professional tasks that can only be performed by the holder of a special license; an employer hires non-exempt employees for the time they will be expected to put in carrying out specific instructions in predetermined sequences that have been designed by exempt employees.

  12. Keep in mind that in the event of a wage and hour audit or claim involving the employee's exempt status, what the facts show really happened day to day in the employee's job is at least as important as what is in the official job description.

  13. Executive-exempt employees have true executive authority, i.e., the power to hire and fire (or else great influence over such decisions) and carry out functions of similar importance with respect to the employment of those who work for them; they are generally the presiding officer of the company or the head of a major division of an enterprise.

  14. Administrative-exempt employees are the "back office" staff and support the work of the entire company or a major division of an enterprise; the decisions they make are of substantial importance to the company as a whole.

  15. Professional-exempt employees are either people in recognized professions (usually, professions for which a basic or advanced college degree and a license or certificate from the state are required) or else people who perform creative and original work in the areas of writing, art, music, and other traditional arts.

  16. The outside sales representative exemption applies only to those whose primary duty is contacting customers or potential customers, making sales, working on contracts, and the like, and who are customarily and regularly away from the employer's principal place of business while performing such duties.

  17. Outside sales representatives may be given a quota, but then are generally free to determine the number of hours needed to meet or exceed the quota.

  18. Exempt computer professionals are the very top information technology employees in an organization; merely being good at using computers to get a job done is not enough for inclusion in this category.

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