Exempt executive employee
To qualify for the executive exemption, an employee must currently earn a minimum of $913 per week or $47,476 per year and meet the following tests:
- Primary duty: manages the enterprise or a customarily recognized department or subdivision of the enterprise.
- Customarily directs the work of two or more other employees.
- Has authority to hire or fire other employees or whose suggestions and recommendations as to hiring, firing, advancement, promotion or other change of status of other employees must be given particular weight.
A rule of thumb: The executive should devote substantial time to supervision. That includes interviewing, selecting and training workers, setting and adjusting pay rates and hours, handling complaints and disciplining employees, directing work and determining what materials, supplies, machinery or tools to buy, sell or stock. That’s not to say that an executive can’t perform other tasks such as stocking shelves or serving food. If the worker remains responsible for the success or failure of the operations under her management while performing nonexempt work, she may be an executive. In addition, if she controls when nonexempt work is performed, her exemption is valid.
The more time the employee spends doing the work of the enterprise as opposed to directing the work, the more likely he is an “executive” in name only and thus eligible for overtime pay.
The phrase “directs the work of two or more employees” means two full-time workers or their equivalent. Thus, an executive could supervise four part-time workers and meet the qualifications, but not one full-time and one part-time employee.
Executives must do more than supervise to be classified as exempt. They must have actual authority over those they supervise or at least have some say in those decisions. It doesn’t matter if the final decision rests with a higher-level manager. Factors that weigh in favor of meeting this requirement include:
- Whether recommendations on hiring and firing are part of the executive’s job description.
- Whether the executive frequently makes suggestions and recommendations.
- How often his suggestions and recommendations are followed.
Exempt administrative employee
To qualify for the administrative exemption, an employee must earn a minimum of $913 per week or $47,476 per year and meet the following tests:
- Primary duty: performs office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.
- Exercises discretion and independent judgment with respect to matters of significance in performing her primary duty.
Selling goods or services in retail isn’t work directly related to the management or general business operations of the employer. Examples that do meet the test include working in tax, finance, accounting, budgeting, auditing, insurance, quality control, purchasing, procurement, advertising, marketing, research, safety and health, human resources, labor relations, governmental relations, computer networking, Internet and database administration, and legal and regulatory compliance. In addition, if you have employees who perform the same sort of functions for your customers, they may also be exempt. Thus, if you employ tax experts or financial consultants who advise your customers, they’re probably exempt provided they meet the salary requirement.
The administrative exemption applies only if the employee also exercises discretion and independent judgment. In general, independent judgment means that the employee compares and evaluates possible courses of action and makes a decision after considering the options.
The employee must have the authority to make an independent choice, free from immediate direction or supervision. Even though her decisions may be revised or reversed after review, she’s still exercising independent judgment. However, the term means more than the use of a skill in applying well-established techniques, procedures or specific standards described in manuals or other sources.
Examples of jobs that qualify for the administrative exemption:
- Insurance adjusters who analyze claims and make recommendations on litigation or settlement.
- Financial service industry workers who analyze customer assets, needs and investments and make recommendations, but not employees whose primary responsibility is to sell a financial product.
- Executive or administrative assistants who, without specific instructions or prescribed procedures, have delegated authority regarding matters of significance.
- Human resource managers who formulate, interpret or implement employment policies.
- Purchasing agents with authority to bind the company on significant purchases.
- Employees of educational establishments who serve as administrators, principals and department heads. Specialists such as counselors, social workers and dietitians don’t qualify under this exemption but may fall under the learned professional exemption (see below)
Examples of workers who don’t qualify for the administrative exemption include inspectors who follow strict guidelines such as electrical or building codes and comparison shoppers who report competitor prices.
Exempt professional employee
The specific requirements for exemption as a bona fide professional employee are summarized below. These employees fall into two general categories: learned professionals and creative professionals.
Learned professional exemption
To qualify for the learned professional exemption, an employee must earn a minimum of $913 per week or $47,476 per year and meet the following:
- Primary duty: performs work requiring advanced knowledge, defined as work that’s predominantly intellectual in character and requires consistent exercise of discretion and judgment.
- Has advanced knowledge in a field of science or learning that is customarily acquired by a prolonged course of specialized intellectual instruction.
In other words, a learned professional performs work that usually involves analysis, interpretation or making deductions from facts and circumstances. The learned professional works with his intellect, not with his hands. The regulations go so far as to state that the advanced knowledge can’t be attained in high school but must ordinarily be in specialized academic training at a higher level. That doesn’t always mean a four-year degree, however; the test is whether the academic training is a standard prerequisite for entrance into the profession.
The types of learning cited in the regulations include the traditional professions of law; medicine; theology; accounting; actuarial computation; engineering; architecture; teaching; physical, chemical and biological sciences; pharmacy and similar occupations. The list will be open to expansion as new professions are created and academic training and specialized degrees are offered in the fields of science and learning. If an advanced specialized degree becomes the standard for a particular occupation, that occupation will become a learned profession.
The overtime regulations go to great lengths to demonstrate what types of professions the DOL believes fit in the learned professional category:
- Doctors and lawyers who hold advanced academic degrees in medicine or law, are licensed in their professions and actually practice their profession. The exemption also covers doctors engaged in internships and residency programs who have completed the requisite academic degree for the general practice of medicine. They include medical doctors, osteopathic physicians, podiatrists, dentists and optometrists. The salary requirement doesn’t apply to doctors or lawyers.
- Teachers employed by educational establishments whose primary duty is teaching, tutoring, instructing or lecturing in the activity of imparting knowledge. Teachers may be certified by a state agency or may work in private schools or other settings without certification, so certification alone is not the sole standard. The salary requirement doesn’t apply to teachers.
- Postdoctoral researchers who engage only in research activities and do not teach are not covered by the teaching exemption. These employees are generally considered professional employees and are subject to the salary threshold for exemption from overtime. Many postdoctoral researchers in the humanities also teach. If their primary duty is teaching, they will be subject to the teaching exemption and not entitled to overtime compensation. If they do not teach, however, and earn less than the new threshold, they will be eligible for overtime.
- Registered or certified medical technologists who have completed three academic years of pre-professional study at an accredited college or university, plus a fourth year of course work in a school of medical technology approved by the American Medical Association.
- Nurses who are registered by their state board of nursing as RNs and have completed a specialized academic degree as a prerequisite for being licensed. Under the regulations, licensed practical nurses (LPNs) or other paraprofessionals don’t meet the learned professional exemption.
- Dental hygienists who have completed four years of pre-professional or professional studies at an accredited college or university approved by the American Dental Association.
- Physician assistants who have completed four years of academic training and graduated from a program certified by one of two professional associations.
- Accountants who are certified public accountants or hold jobs similar to public accountants. Accounting clerks and bookkeepers who do routine financial work aren’t included in this category.
- Chefs with four-year academic degrees in the culinary arts. However, cooks who perform routine mental, manual, mechanical or physical work don’t qualify for this category.
- Athletic trainers who have completed four years of aca-demic training in a specialized program accredited by the Commission of Accreditation of Allied Health Education Programs and are certified by their professional board.
- Funeral directors and embalmers licensed by and working in a state that requires a four-year academic degree program accredited by the American Board of Funeral Service Education.
The regulations exclude most paralegals or legal assistants from the exempt professional category because entry into this field doesn’t require an advanced academic degree. Most paralegals have two-year associate degrees or certificates rather than four-year specialized degrees in the field. Exception: If you hire someone in another learned profession to work as a paralegal, she’s probably exempt (for example, a registered nurse who’s hired as a paralegal to help evaluate medical malpractice claims).
Note: Because medical coders have no recognized educational program at the college level, the DOL has concluded that they aren’t professionals. (It’s not enough that they have a professional certification program available.)
Creative professional exemption
To qualify for the creative professional exemption, an employee must earn a minimum of $913 per week or $47,476 per year and meet the following:
- Primary duty: performs work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. The exemption doesn’t apply to work that a person could perform with general manual or intellectual ability and training.
- Works in a recognized field of artistic or creative endeavor, including music, writing, acting and the graphic arts.
Generally, the following are exempt creative professionals:
- Musicians, composers and soloists.
- Actors.
- Painters and artists who are given general guidelines as to subject matter.
- Cartoonists who are given only the title or underlying concept for a cartoon and must rely on their own creative ability to express the concept.
- Essayists, novelists, short-story writers and screenplay writers.
- Writers in advertising agencies.
- Journalists working for newspapers, magazines, television and other media who contribute a unique interpretation or analysis to a news product or those who appear as on-air personalities, conduct interviews or serve as narrators or commentators.
Examples of workers who don’t qualify for the creative professional exemption: reporters who only rewrite press releases, report on routine community events like school board meetings and the like; animators who illustrate cells for motion picture cartoons; photographers who only retouch photos.
Computer-related professional exemption
To qualify for this exemption, a computer employee must:
- Be compensated either on a salary or fee basis at a rate not less than $913 per week or $47,476 per year
- Be a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below.
Primary duty must consist of:
- Application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications.
- Design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications.
- Design, documentation, testing, creation or modification of computer programs related to machine operating systems.
- Or a combination of the aforementioned duties that requires the same level of skills.
No specific educational requirement applies to this exemption. The Labor Department says, however, that workers who simply use computers to aid in their work, such as drafters and others in computer-aided design, don’t qualify. This exemption also doesn’t include those who repair computers or assemble them.
Outside sales employee exemption
Outside sales employees also may be exempt if their primary duties are one of the following:
- Making sales or
- Obtaining orders or contracts for services or use of facilities for which a consideration will be paid by the customer and
- Who are customarily and regularly engaged away from the employer’s place or places of business while selling or obtaining orders or contracts for services.
Essentially, an outside sales employee spends most of her time away from the employer’s office facilities “on the road” making sales calls. The person doesn’t lose exempt status by performing a few tasks that aren’t directly related to sales. For example, she may restock display cases, attend sales conferences, write sales reports and revise sales catalogues as work incidental to the main task of getting orders.
The outside sales exemption doesn’t apply to salespersons who work in-house or may work from a home office. The regulation specifies that “outside sales does not include sales by mail, telephone or the Internet . . .” unless the person is following up on a personal sales call. The crucial factor distinguishing outside salespeople from others is the emphasis on face-to-face selling.
Under the regulations, a driver who also sells may be an exempt outside sales employee if he:
- Provides the only sales contact between the employer and the customers visited and takes orders, delivers them from the truck then or later and is paid based on the volume of goods sold.
- Obtains or solicits orders along the route or solicits new customers during his stops.
Not everyone who drives a truck full of goods qualifies. For example, drivers who stock vending machines or drivers who get the occasional order or simply deliver and set up displays are not exempt outside salespersons.
No minimum salary requirement applies for outside sales employees. Many are paid straight commission rather than a salary.
Source: http://www.businessmanagementdaily.com/