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Exempt Employee

Written by

Tiffany Clark

Reviewed by

VidCruiter Editorial Team

Last Modified

Jun 27, 2024
Exempt Employee
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The U.S. Fair Labor Standards Act (FLSA) is federal legislation whose terms classify an organization’s employees as either exempt or non-exempt. Under the FLSA, non-exempt employees are entitled to protections such as a minimum wage and overtime pay. Exempt employees are excluded from these protections. Both types of employees have their eligibility requirements, with differing types of workplace benefits. 

 

To be considered an exempt employee, these three primary requirements must be met:

 

  • Job duties:

  • Salary payment: 

  • Total earnings:

 

Exempt status only applies to employees, not volunteers or independent contractors. In addition to requirements mandated by the FLSA, many U.S. states have their own wage laws and regulations employers need to follow. 

 

Executive Exemption 

 

Employees with executive exemption must meet these requirements: 

 

  • Regularly supervise four part-time employees or more than one full-time employee

  • Manage part of the business and play an essential role in hiring employees and delegating tasks

 

Professional Exemption

 

Employees with professional exemption meet these three criteria:

  • Have higher educational qualifications or a college degree in their field of expertise

  • Exercise judgment and discretion while performing duties requiring specialized training or education

  • Have a creative professional exemption if they work in an artistic or creative field using their talent, originality, inventiveness, and imagination to perform required tasks and duties

 

Outside Sales Exemption

 

Employees with an outside sales exemption must meet these requirements: 

  • Conduct work at a location outside of the employer’s business premises

  • Have securing contracts or orders or making sales as their primary job duty

 

Administrative Exemption 

 

For administrative exemption, employees must meet these two requirements:

  • Autonomously exercise independent discretion and judgment over essential business decisions

  • Perform non-manual or office work related directly to the operations of the business or manage an organization and its customers

 

Highly Compensated Employees

 

Highly compensated employees typically have non-manual or office job duties and meet the FLSA’s minimum salary requirement for this classification. Additionally, exempt highly compensated employees must have at least one of the job responsibilities of an exempt professional, administrative, or executive employee. 

 

Exempt Employee Examples

 

Exempt professional employees might include lawyers, doctors, registered nurses, licensed engineers, architects, dentists, teachers, or other roles requiring advanced training, experience, or education. 

 

Exempt administrative employees can include professionals in human resources, public relations, legal, accounting, payroll, finance, and compliance. These roles provide support services to operations and production staff. 

 

Creative professionals with exemption status might include actors, writers, musicians, artists, journalists, and composers. 

Related Terms

Non-Exempt Employee

refers to employees who are covered by the protections mandated by the FLSA. Non-exempt employees usually receive hourly wages, and they are entitled to overtime pay and a minimum wage.

Salaried Employee

is a term referring to an employee who receives a fixed compensation amount that is distributed in regular paychecks. In many cases, salaried employees hold exemption status under the FLSA if they meet the required criteria.

Job Duties Test

is a component of the FLSA that can be used to determine whether an employee is exempt or non-exempt. The job duties test evaluates the job responsibilities and tasks the employee is required to perform to see if they meet exemption criteria.

Independent Contractor

workers are not employees of an organization. Rather, they provide services under specified contract terms. Independent contractors are not covered by FLSA protections.

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