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White Collar Exemptions

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White Collar Exemptions

This article was authored by Tracey Bolotnick, an Attorney at Hurwit & Associates with extensive experience advising exempt organizations on employment matters. She can be contacted at (617) 630-6900 or tbolotnick@hurwitassociates.com for further information.

The Fair Labor Standards Act requires both for-profit and nonprofit employers to pay their employees minimum wage for all hours worked, and overtime for hours worked in excess of 40 each week. There are a variety of exemptions from the minimum wage and overtime requirements, including, for example, the internship and volunteer exemptions, and the so-called "white collar" exemptions. The white collar exemptions recognize that in general, employees in higher paying jobs, who hold a reasonably high degree of responsibility, tend to be less in need of the statutory wage and hour protections (i.e., more able to look out for themselves in negotiating the terms of their employment).

Three of the most common categories of white collar exemption include executive employees, administrative employees and professionals. (Other categories, which are outside the scope of this article, include computer employees, outside salespersons and highly compensated employees.)

To be classified as an exempt executive, administrative or professional employee, workers must meet a salary test and a duties test.

  1. Salary Test:

    Executive, administrative and professional employees must be paid on a salary basis (as opposed to an hourly basis), and must earn a minimum of $455 per week ($23,660 per year), without regard to how many hours per week they work. (It should be noted this amount may increase in the near future, as the Department of Labor has issued a Notice of Proposed Rulemaking regarding such increase.)

  2. Duties Tests:
    1. Executive employees must (1) have a primary duty of managing the employer's business or a recognized department or subdivision of the business, (2) customarily or regularly direct the work of two or more other employees, and (3) have the authority to hire or fire other employees, or have particular weight given to their suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees.

    2. Administrative employees must (1) have a primary duty of performing office or non-manual work directly related to the management policies or general business operations of the employer or its customers, and (2) exercise discretion and independent judgment with respect to significant matters.

    3. Professionals must have a primary duty of performing office or non-manual work that requires one of the following (1) knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction, or (2) invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

Employers should carefully analyze their employees' responsibilities under the foregoing federal tests in assessing whether they qualify for one of the white collar exemptions from the minimum wage and overtime laws. Job titles and descriptions alone will not be determinative if they do not accurately reflect the substance of the position.

In addition, states have their own wage and hour laws and exemptions, many of which closely track the federal laws, but some of which depart significantly from the federal requirements. Employers must ensure they are compliant with these state laws as well.

Additional Resources

For more information regarding white collar exemptions and the wage and hour laws, refer to the following resources:

  1. US Department of Labor Fact Sheet: "Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA)"
  2. US Department of Labor Notice of Proposed Rulemaking: Overtime (July 6, 2015)