What Is An Exempt Employee?

Which employees are exempt from overtime payments under the FLSA?

Employees who are exempt from overtime pay under the Fair Labor Standards Act (FLSA) include salaried professionals who earn more than $23,660 a year as well as some farmworkers, drivers, drivers’ helpers, loaders, mechanics, salespeople who earn commission, seasonal employees, and recreational employees.

The U.S. Department of Labor (DOL) has previously estimated that around 20% of all American employees are exempt from overtime pay under the Fair Labor Standards Act.

Exemptions from overtime are carefully defined by the DOL, and it’s the employer’s responsibility to know who’s exempt and who’s not. This includes knowing whether or not someone should be classified as an employee in the first place. The penalties for misclassifying employees include fines, tax repayments, and even prison, so we recommend checking the regulations and getting professional advice before deciding who’s eligible for overtime.

Which salaried professionals are exempt?

The FLSA says professional employees who earn a salary of more than $23,660 a year are typically exempt from overtime pay.

Under the FLSA, an employee is considered to be on a salary if they are guaranteed to receive a minimum amount of money each week, even if their paycheck breaks this down into an hourly rate, or if they end up earning less than the guaranteed minimum because they have legitimate deductions-such as unpaid time off for sick leave-taken off their paycheck.

As well as having to earn more than $23,660 a year, the FLSA sets out some additional requirements for executive, administrative, academic, creative, and other professionals to meet in order to be exempt from overtime payments, and these vary by profession.

Which executive employees are exempt?

To be exempt they must earn more than $23,660 a year and:

  • Their primary duty must be managing the business or a department or subdivision of the business.
  • They must manage at least two other full-time employees and must have the authority to hire or fire employees.

Which administrative employees are exempt?

To be exempt they must earn more than $23,660 a year and:

  • Their primary duty must be office work or other non-manual work.
  • They must have the freedom to work independently and exercise their own judgment.

Which academic/scientific employees are exempt?

To be exempt they must earn more than $23,660 a year and:

  • Their primary duty must “intellectual in character” and require advanced knowledge of the discipline.
  • Their work must also require the consistent use of their own judgment and discretion.

Which creative employees are exempt?

To be exempt they must earn more than $23,660 a year and:

  • Their primary duty must involve “invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.”

Read more about professional exemptions.

Which computer professionals are exempt?

Computer professionals are exempt from overtime payments under the FLSA if they receive a salary of more than $23,660 and are employed as a computer systems analyst, computer programmer, software engineer, or in a similar line of work.

Read more about computer professional exemptions.

Which farmworkers are exempt?

Farmworkers who do not produce goods for interstate commerce are exempt from overtime pay under the FLSA, as are the employees of smaller farms whose employees did not work more than 500 days between them in any quarter of the preceding year.

Other exempt farmworkers include those who are:

  • Employed by an immediate family member.
  • Producing livestock on a range.
  • Seasonal hand-harvest laborers who commute to work every day and are paid on a piece-rate basis.
  • Hand-harvest laborers who are 16 or under, paid on a piece-rate basis, and work on the same farm as a parent.

Read more about farmworker exemptions.

Which drivers, drivers’ helpers, loaders, and mechanics are exempt?

Drivers, drivers’ helpers, loaders, and mechanics are exempt from overtime payments under the FLSA if they are employed by a taxi company, fix vehicles that are used for interstate or foreign trade, or if they are not covered by the small vehicle exception.

A “small vehicle” in the small vehicle exception is anything that weighs 10,000 pounds or less that does not carry more than eight paying passengers, more than 15 non-paying passengers, or hazardous materials.

Read more about vehicle exemptions.

Which commissioned sales employees are exempt?

Salespeople are exempt from overtime payments under the FLSA if more than half of their earnings come from commission and if they earn, on average, more than one-and-a-half times the minimum wage.

Read more about commissioned sales exemptions.

Which seasonal and recreational employees are exempt?

Seasonal and recreational employees are exempt from overtime payments under the FLSA if they work for a company which only operates for a total of seven months in any calendar year.

Read more about seasonal and recreational exemptions.

If my employees are not exempt, how much overtime do I need to pay?

The FLSA requires employers of a certain size or type to pay overtime of 1.5 times the normal rate to all nonexempt employees who work more than 40 hours in any workweek. Some states, such as California, have their own overtime regulations as well which can increase the amount of money you must pay your employees for overtime above a certain threshold.

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