Living on low wages is a struggle millions of Americans contend with. The possibility of going to school, supporting a family, or pursuing your dreams gets narrower when every paycheck goes straight to rent, utilities, or food.
Thanks to the Fair Labor Standards Act (FLSA), low-wage employees are promised one thing that can help with the difficulty of working for such pay: it will not go uncompensated. The FLSA guarantees workers a minimum wage of $7.25 per hour and fair overtime.
Are you exempt from the FLSA wage and overtime regulations?
There is definitely a small percentage of employees who are categorized as “exempt” which means they are not entitled to federal minimum wage or overtime under federal law.
Yet, there exist employers who are willing to lie to their employees about their exemption status. The Department of Labor calls employee misclassification “one of the most serious problems” facing workers in the American economy.
Whether it’s wage theft, misclassification, or any other common wage violation, we consider this the worst insult to you. Read more below to learn more about common exemptions used by employers. By the end, you should be able to determine whether you are entitled to overtime wages and the federal minimum wage.
1. Executives, Administrators, Professionals, and Outside Sales
The biggest FLSA exemption is when it comes to what kind of work you do. It depends entirely on what kind of work you do in order to count.
Those who are paid a salary of no less than $455 every week, or $23,600 a year, may be considered exempt under section 13(a)(1) of FLSA. If you make less than that, or slightly more, it’s likely you’re entitled to overtime.
Specifically, your job duties, not your title, are the most important aspect of this. Those who are true executives, administrators, professionals, or outside sales employees are exempt under 13(a)(1) of the FLSA.
Those who are paid more than $455 per week but don’t fall into one of the above-mentioned categories are not exempt and therefore entitled to overtime.
According to FLSA, an executive manages other employees. You typically need to manage more than two other employees, as management is one of the primary duties of an executive.
Below are characteristics that executives typically perform:
- You delegate work to other employees
- You set working hours and adjust pay for other workers
- You are responsible for interviewing prospective employees and train those that are hired
- You decide how the work should be done
- You make and set budgets for a project
Executives can manage an entire company, or they can manage a specific department within a company. Additionally, they can also manage a single shift.
The make or break when it comes to defining executive qualities is the role of this executive must have genuine and viable input in personnel decisions. It doesn’t mean they are responsible for hiring and firing, but sometimes this is the case. When it comes to executive duties, the workers opinion and recommendations are thoroughly considered when making personnel decisions.
Regardless of the title in your name, it’s important to evaluate the criteria as defined by the FLSA in order to determine if you are exempt or not.
Below is the executive exemption test:
- Do you make a salary?
- Are you guaranteed at least $455 every week no matter how much you actually work?
- Do your job duties sound like those described above?
If you answer yes to all three of those questions, you are not entitled to overtime pay. If you said no to any of them, but your employer has told you you’re exempt, you may be the victim of wage theft and you should contact our lawyers.
Administrators typically do office work that isn’t manual, as well as work that is directly related to a business’s “general operations.”
Typical duties of an administrator include:
- Human resources
- Database administration
To be considered an administrator under the FLSA, you should be able to exercise your own discretion; what is called, “independent judgment” in performing job duties that have a direct impact on the function of the business.
- Are you able to design and implement new management policies yourself?
- Can you change a pre-existing operating practice to make it better?
- Do you have the authority to give the go-ahead on issues that will have a major financial impact on the business?
- Can you plan out goals for the business, either in the short or long-term?
- Are you tasked with investigating potential problems, and have the authority to resolve them?
If you answered no to those questions, you are probably not an administrator.
Administrator Exemption Test
- Are you paid a salary?
- Are you guaranteed $455 per week, no matter how many hours you end up working?
- Does your current job sound like an administrator as we have defined it?
If you answered yes to the above questions, you are likely an administrator and not entitled to overtime pay.
According to the FLSA, there are two types of “professionals.” Those are learned professionals and artistic professionals. Read more to find out which one you may or may not be, and whether or not you are entitled to overtime pay.
Those in this profession have advanced knowledge in order to be considered a learned professional.
The FLSA typically uses an advanced degree (one beyond an undergraduate), as a yardstick for whether or not an employee has “advanced knowledge” in their field of employment. Apprentices, in this case, do not count.
If you’re considered a “learned professional” you perform work of an “intellectual” nature. This means that you have a specialized understanding of a subject; analyze problems; deduce solutions. This work will almost always rely on the independent judgment of a situation without the oversight of anyone else.
Learned professionals come in certain fields such as:
- Actuarial Computation
- Physical Sciences
However, there are more factors than just the advanced degree. Your advanced degree must be in a field that you actually work in order to be considered a “learned professional.”
Artistic professionals are in a class of employment that relies on creativity, imagination, or invention in one of the four fields of the arts: music, writing, acting, and graphic arts. Most actors, writers, musicians, cartoonists, or composers are not entitled to overtime wages under FLSA.
Professional Exemption Test
- Are you paid a salary?
- Are you guaranteed $455 per week, no matter how many hours you end up working?
- Does your current job match our definition of a learned or artistic professional?
If you said yes, you may be properly classified as an exempt professional. If you answered no to any of them you could be entitled to overtime wages.
Outside Sales Employees
Those in this profession often work away, and on a regular basis, from their employer’s place of business. Their main duties are to sell products or winning orders and contracts for the services their employer provides; or for the use of an employer’s facilities.
According to the Department of Labor, any “transfer of title to tangible property, and in certain cases, of tangible and valuable evidences of intangible property” is considered a sale. For example, this could also mean the selling of advertising time on radio or television.
You may be considered exempt from overtime wages if you deliver products to your company’s clients, and also happen to make sales, but only if those sales are considered the primary duties of your employment.
Under FLSA, an outside sales employee does not need to make a salary of at least $455 per week to be considered exempt.
Outside Sales Exemption Test
- Is your primary duty that of making sales, or obtaining orders and/or contracts from a customer or client?
- Do you customarily work away from your employers place of business?
If you answered yes to both of those questions, you could accurately be categorized as an outside sales employee. If not, you may be getting misclassified and losing out on the money you rightfully earned.
Real Exemption for Specific Jobs
There are many specific professions where employees are exempt from FLSA overtime and minimum wage requirements.
For example, there are some workers who are entitled to overtime but are not entitled to the minimum wage. That includes:
- Airline employees
- Aircraft, boat and tractor-trailer salespeople
- Mechanics and salespeople at car dealerships
- Drivers, mechanics, and loaders employed by motor carriers whose duties affect the safety of vehicles on interstate highways
- Employees of national parks, national forests or wildlife refuges who work in amusement or recreation
- Purchasers of agricultural products
- Workers who transport fruits and vegetables
- Workers who process sugar
- People who sell farm implements
- Workers at livestock auctions
- Elevator operators in rural areas
- Police offers who work in small public police departments, less than 5 officers
- Firefighters who work in small public fire departments, ones with less than 5 firefighters
- Forestry workers employed by small companies, less than 9 employees
- Employees of small lumber operations, less than 9 employees
- Local delivery people
- Cab drivers
- Houseparents at not-for-profit education institutions
- Workers at movie theaters
- Employees at small-market radio stations
- Employees at small-market TV stations
- Railroad workers
- People who work at sea on American vessels
Other examples of workers who are exempt from both minimum wage and overtime pay include:
- Babysitters who don’t work for the same client on a regular basis
- Federal criminal investigators
- Homeworkers making wreaths
- Newspaper delivery workers
- Employees of newspapers with limited circulation
- Switchboard operators
- People who work at sea on non-American vessels
Disabled workers are exempt from the federal minimum wage but are still entitled to overtime pay. Workers are “amusement or recreational establishments” that are not open more than seven months out of the year; or places that make a significant amount of money during one part of the year.
Real Exemption – Commissioned Salespeople
If you work for “retail or service establishment” as a salesperson, you may not be entitled to overtime wages if more than half of your earnings come from commission.
If the goods or services your employer sells are for resale, the FLSA does not count the business as a “retail or service establishment.” Only those that make a minimum of 75% of their annual sales on goods or services that are not for resale count.
Ideally, the only way to figure out if you are a commissioned salesperson, is you have to calculate your hourly regular rate.
For example, if you make an average more than one-and-a-half the minimum wage (either federal or state) for every hour worked, you may be exempt as a commissioned salesperson. Your regular rate includes commissions, plus a salary if applicable, and does not matter if your commission is on a weekly, biweekly, monthly, or another basis.
- Do you work for a retail or sales establishment?
- Are more than half of your earnings from commissions?
- Do you make more than one-and-a-half the federal minimum wage or an applicable state minimum wage?
You may be misclassified if you answered no to any of those questions.
Real Exemption: Some Computer Employees
Generally, many software engineers, programmers, or systems analysist fall under this exemption. But it’s important you specify what, exactly, your job entails.
You must make a salary of at least $455 per week or an hourly wage no less than $27.63.
Your primary duties should involve some or all of the following:
- Applying techniques and procedures of systems analysis to decide the necessary hardware, software, or system functional specifications
- Design, develop, analyze, test, or modify computer systems or programs, based on user or system design specifications
Similar to the “learned professional” exemption (see above), it is presumed you have advanced knowledge or skills in these fields.
Those who physically manufacture or repair computer hardware are not included in this exemption. Neither are workers who depend heavily on computers (such as engineers and drafters) but aren’t necessarily systems analysts or programmers.
Independent Contractor: are you misclassified?
The Department of Labor has made it difficult for independent contractor status for quite some time. Based on their attitude in the past and very recently, they believe employers misclassify employees on a regular basis: meaning cutting taxes or withholding basic protections (including minimum wage and overtime pay) from those who deserve that compensation for their work.
What’s known as the Administrator’s Interpretation No. 2015-1 made it harder for businesses to get out of paying their workers fair wages. On July 15, 2015, the standard-setting document expanded the definition of “employee” but also narrowed the definition of “independent contractor.”
Changes for Home Health Care Aides
For a very long time, home health care aides fell under the FLSA “companionship” exemption and were not entitled to federal minimum wage or overtime pay. However, after legal challenges, the Department of Labor fought to change the exemptions.
In August 2015, a US Circuit Court of Appeals in Washington, D.C. upheld new regulations for home health care aides. It narrowed the definition of “companionship” and ensured third-party employers could no longer classify in-home workers as exempt.
Here are a few highlights that may be useful for you to consider:
- Only workers who are actually employed by the individual or family using the in-home services will be exempt from the FLSA’s minimum wage and overtime requirements
- Third-party companies, including home care agencies, can no longer claim the companionship exemption
- Live-in domestic service workers employed by a third-party agency are now entitled to both the minimum wage and overtime pay
According to the press release from the Department of Labor, the new rules will extend minimum wage and overtime protections to nearly two million home-care workers, including those who were previously exempt.