The Fair Labor Standards Act (FLSA) allows for several categories of employees to be exempt from its overtime provisions; they are professional, executive, administrative, outside sales, and computer. Each category has its own criteria to allow an employee to be exempt from the Act’s overtime provisions. Simply put, if an employee 1) meets the criteria defined in the Act, or in subsequent court decisions, or in Department of Labor Opinion Letters; AND 2) is paid a regular salary of not less than $455 per week that is not changed due to an employee’s hours worked or quality of his or her work, then he or she does not need to be paid overtime for work done in excess of 40 hours per a defined workweek.

One of the more misunderstood exemptions that allows an employee to be exempt from the FLSA overtime provisions is the professional exemption. The professional exemption is to be applied to an employee who works in a field that requires advanced knowledge in a field of science or learning. The FLSA provides that the knowledge is typically to be acquired in a formal, prolonged, educational setting, and cannot be acquired on-the-job. A recent US Circuit Court decision has held that the advanced knowledge must be acquired in a prolonged course of specialized intellectual instruction.

To clarify the court’s decision, here are a couple of examples. A person who works as an engineer in a scientific laboratory cannot (despite whatever knowledge and skills she has acquired over the years) be treated as an employee who is exempt from minimum wage and overtime if she has not acquired these skills in a formal educational setting. Similarly, a teacher who has not received his degree from an accredited institution may not be treated as exempt from minimum wage and overtime.

Any employee who is non-exempt must be paid at least minimum wage and overtime for hours worked over 40 per workweek. One of the most dangerous things an employer can do is misclassify an employee as exempt, and therefore not pay any overtime. While many employees like the regular salary, and the “prestige” that goes with a salaried position, they can quickly realize after their employment ends that they should have been hourly/non-exempt, and paid overtime. I’ve seen too many press reports about an employee who sues his current/former employer, is found to be non-exempt, and the back-wages and penalties are all based on hours claimed by the employee, because the employer has no records other than 40/40/40, etc. hours paid per week. Further, when an employee is found to be non-exempt, each similarly situated employee also loses his or her exemption, making the back wages and penalties all the more damaging to an employer’s bottom line — these types of payments are not covered by any type of insurance, as the insurance company assumes that you have properly classified and paid your employees.

The analysis of whether a particular position is exempt or non-exempt is beyond a newsletter article. If you have not already had EMPO draft or review your job descriptions, you can contact your HR Consultant, and we would be happy to help. During the creation of a job description, we would help you determine whether any particular position is exempt or non-exempt.