and Nonexempt Employees
All employees in your business must be classified by you as
either exempt or nonexempt for purposes of complying with the
FLSA — the federal law that governs wages and hours. Based on
the criteria set out by the law, you can determine which
classification is appropriate for each of your employees.
What does "exempt" mean? When an employee is
exempt from the FLSA, it means that that employee is not
entitled to the benefits and protections of the FLSA, and you,
as an employer, are not subject to its rules for that employee.
That means that an exempt employee may not have to be paid
minimum wage or paid in accordance with the overtime
requirements specified by the FLSA, for example.
What does nonexempt mean? When an employee is
classified as nonexempt, it means that the employee is entitled
to a minimum
pay at the rate of time and one-half the regular rate for
all hours worked in excess of 40 hours per week, as well as
other protections under child
labor and equal
pay, as prescribed by the FLSA.
If you want to treat an employee as exempt, you must pay him
or her a salary. Employees who are paid by hourly wage are
automatically considered to be nonexempt. However, you can have
nonexempt employers who are paid by salary.
Which employees are considered "exempt?" An
exemption from the minimum wage, equal pay, overtime pay and
child labor provisions of the FLSA applies to:
- Employees engaged in delivery of newspapers to consumers.
- Homeworkers making evergreen wreaths.
An exemption from the minimum wage, equal pay, and overtime
requirements of the FLSA (but not the child labor laws) applies
- Employees of amusement or recreational establishments
having seasonal peaks.
- Seamen on non-American vessels.
- Employees engaged in the fishing industry, including
offshore seafood processing.
- Agricultural employees of an employer who did not use more
than 500 person-days of agricultural labor in any quarter of
the preceding calendar year; agricultural employees who are
members of the employer's immediate family; hand-harvest
laborers who are paid on a piecerate basis, commute daily
from their permanent residences, and whose agricultural
employment, if any, during the preceding calendar year was
for less than 13 weeks; hand-harvest laborers under 17 years
of age who are employed at a piece rate on the same farm as
their parents; and workers principally engaged in the range
production of livestock, such as cowboys and shepherds.
- Employees of weekly, semiweekly or daily newspapers of
less than 4,000 circulation, the major part of which is in
the county of publication or contiguous counties.
- Switchboard operators employed by independently owned
public telephone companies having not more than 750
- Employees who are casual babysitters or companions to ill
or aged persons unable to care for themselves.
An exemption from the minimum wage and overtime laws (but not
the equal pay or child labor laws) applies to:
- Executives: an employee is an executive if the
individual has discretionary powers and exercises managerial
functions at least 50 percent of the time. A supervisor who,
for example, assigns work, evaluates work, makes
disciplinary recommendations, and is responsible for worker
safety, and for whom this kind of work comprises 50 percent
or more of her time is exempt under the FLSA as an executive
- Administrative: an employee is in an administrative
position if the individual assists an executive or
administrative official in the performance of his or her
duties or performs any of the following: (1) acts in a staff
or a functional capacity (such as a tax advisor), (2)
performs special assignments, (3) performs office or
nonmanual work directly related to management policies, or
(4) customarily and regularly exercises discretion and
- Professionals: an employee is a professional if the
individual falls into one of three categories: (1) learned
professions with recognized status based on the acquisition
of professional knowledge through a prolonged course of
study, (2) artistic professions, or (3) teachers.
- Outside salespersons
Once you've determined the status of each employee, you can
then begin addressing the specific issues involved in complying
Note that each of these four major requirements exempts
certain other employees from its scope; see the individual
descriptions of these requirements for more information.