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FLSA Administrative Exemptions: Essential Information

Neva Stotler

Under the Fair Labor Standards Act (FLSA), employers in the US must pay most of their employees no less than the federal minimum wage. Additionally, the FLSA requires that most employees be paid overtime pay equaling time and one-half of their regular hourly rate of pay for all hours worked in excess of 40 hours in a given work week.

For example, if an employee typically earns $20 per hour, their overtime rate would be $30 per hour.

However, this FLSA requirement does not apply to all employees. Section 13(a)(1) of the FLSA specifies that some exemptions apply to certain workers depending on the nature of their roles.

For instance, if someone works in an administrative role, FLSA minimum wage and overtime requirements might not dictate their pay rate all the time. This general overview will help you better understand what an administrative employee does and how a FLSA administrative exemption impacts pay. The FLSA exemptions are defined, specific, and are the exception to the general rule that workers are entitled to overtime pay. What makes this analysis more complicated is that the states may adopt rules that are more strict (more favorable to the employee) than the federal law. For example, Pennsylvania does not recognize a computer job exemption. So, in Pennsylvania employees working in certain computer focused jobs must be paid overtime, despite the federal exemption. Make sure you review the state regulations when making any pay classification determinations.

What is an Administrative Employee According to the FLSA?

Someone may qualify as an administrative worker under the FLSA if these conditions are met:

  • The employee’s compensation consists of a salary or fee equaling no less than $684 per week; and
  • The employee’s main work duties consist of office/non-manual tasks which involve management of business operations of the employer or its customers; and
  • The employee’s duties involve exercising their own independent judgment “with respect to matters of significance”

These criteria can seem vague. Consider that final point. An employer might not know whether a worker should be classified as an administrative worker if they’re struggling to determine whether the degree to which said employee is permitted to make independent decisions meets the standards of the FLSA. When the case is close, err on the side of the general rule—no exemption. But to analyze the facts further, reference to court cases, advisory opinions and DOL guidance can clarify the analysis.

This is one of many reasons employers should coordinate with legal counsel who works with FLSA and state laws and regulations when classifying workers. Doing so can help you ensure compliance with the requirements of the FLSA, and avoid damages and penalties

How Does an Administrative Exemption Affect Pay?

An administrative exemption will essentially affect whether an employee who has been classified as an administrative worker is required to receive minimum wage and overtime pay.

For example, a manager at a company has an assistant. The manager is a fairly high-ranking member of the organization who has the authority to make important decisions. Her assistant has no such authority and performs tasks such as tracking projects, scheduling, following up on emails, completing routine paperwork, etc.

Perhaps the manager wants to get ahead on a project and decides to stay at work a few extra hours every day for a week to do so, and asks her assistant to stay after regular hours to help get the job done.In this scenario, if staying extra hours means working more than 40 hours a week, the assistant would be entitled to overtime pay of time and one-half the normal hourly rate. The manager would not receive any additional pay.

This is just one example of an exemption. There are several, including for executives and professionals.

Don’t worry if knowing when a FLSA administrative exemption does and does not apply sometimes confuses you. N. Stotler Law, offers employers legal support to properly classify jobs and apply the exemptions, counsel on strategies to change mis-classified employees, and self-audit for compliance. Learn more about how we can help by contacting us online or calling us at 724-841-5565.

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