The Fair Labor Standards Act (FLSA) requires that certain employees be paid at least the Federal minimum wage for all hours worked, and overtime pay at a rate of time and one-half the regular rate of pay after forty (40) hours in any particular workweek. These employees are “nonexempt” – meaning they are not exempt from such requirements (ie. they are protected by such laws). “Exempt” employees are not protected by these laws, ie. exempt employees are not entitled to overtime pay.

Q:  You pay your secretary a salary. Is she exempt under the FLSA (ie. you do not have to pay your secretary overtime if she works over 40 hours in a particular workweek)?

A:  All salaried employees are NOT exempt. For most businesses, salaried employees are only exempt if they (1) satisfy the applicable “duties test” of a “white collar exemption” (exemptions for executive, administrative, professional, and computer professionals) and (2) are paid a minimum of $455/week or $23,600/year salary. If the salaried employee’s job fails to satisfy all of the duties requirements of the white collar exemption, the employee will not be exempt and will be entitled to overtime for all hours worked in excess of 40 in a work week. To qualify for the administrative exemption, the employee’s primary duty must be the performance of office or nonmanual work directly related to the management or general business operations of the employer or the employer’s customers and the employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. Most secretaries do not meet the administrative exemption’s duties test and are nonexempt.

Highly compensated employees performing office or non-manual work and paid a total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) are exempt under the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption.

These minimum salary thresholds will change as of January 1, 2020! Click here for more.



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