[Editor's Note: On Sept. 8, 2023, the Department of Labor (DOL) issued a proposed rule increasing the Fair Labor Standards Act's (FLSA's) annual salary-level threshold to $55,068 from $35,568 for white-collar exemptions to overtime requirements. The department also is proposing automatic increases every three years to the overtime threshold and an increase to the minimum salary for highly compensated employees to $143,988. A public comment period will be open until Nov. 7, 2023.]
Overview
The Fair Labor Standards Act (FLSA) is a federal law with broad coverage, affecting most private and public employees. The FLSA generally requires employers to pay all covered nonexempt employees the statutory minimum wage and overtime pay of at least one and one-half times their regular rates of pay for hours worked in excess of 40 hours in a workweek.
There are some exceptions to the 40-hour-per-week standard for employees of hospitals and nursing homes and for police officers and firefighters employed by public agencies.
This toolkit provides an overview of the positions that may qualify for an exemption from overtime pay under the FLSA white-collar and industry exemptions. See What You Need to Know About White-Collar Overtime Exemptions Under the FLSA.
FLSA Coverage
Under the FLSA, the term "employ" means to "suffer or permit to work," however, some individuals may not fall within that definition. For example, trainees, interns, externs, apprentices and graduate assistants may not be considered employees within the meaning of the FLSA.
Individuals also may not be covered by the FLSA when they volunteer time to religious, charitable, civic, humanitarian or similar nonprofit organizations as a public service and do not expect or receive compensation. See DOL FLSA Advisor: Volunteers.
The FLSA also does not apply to work performed by independent contractors.
If an employment relationship exists, the FLSA applies when either the individual or enterprise coverage rules are met. An employee is covered by the FLSA on an individual basis if he or she is "engaged in commerce or the production of goods for commerce." 29 U.S.C. Section 206(a). The rules for enterprise coverage focus on the nature of the employer's business. See DOL Fact Sheet #14: Coverage Under the Fair Labor Standards Act.
Unless an employer can establish that it is not covered by the FLSA or that an exemption from the FLSA applies, employees are presumed to be eligible for overtime. Employers and employees cannot agree to waive coverage of the FLSA. Similarly, in most circumstances, collective bargaining agreements cannot waive coverage of the FLSA.
Overtime Exemptions Under the FLSA
The FLSA Section 13(a)(1) exemptions are often referred to as the white-collar exemptions. To be exempt from overtime, a position must meet the following three criteria:
- A minimum salary threshold (some exceptions apply).
- Payment on a salary basis as defined by the regulations (some exceptions apply).
- A primary duty test that is specific to each exemption.
Minimum salary
On Sep. 24, 2019, the U.S. Department of Labor (DOL) issued a final rule that set a new salary threshold of $684 a week ($35,568 annualized) for the FLSA's white-collar exemptions, effective Jan. 1, 2020. Employers are permitted to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level.
The 2019 final rule includes a special salary level of $380 per week for employees in American Samoa. In addition, a special salary level of $455 per week applies to employees in Puerto Rico, the U.S. Virgin Islands, Guam and the Commonwealth of the Northern Mariana Islands.
The 2019 final rule also includes a special "base rate" threshold for employees in the motion picture producing industry of $1,043 per week (or a proportionate amount based on the number of days worked).
Salary basis
An exempt employee must be paid a predetermined and fixed salary that meets the minimum salary requirements in the regulations and that is not subject to reduction because of variations in the quality or quantity of work performed. See Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA)
White-collar exemptions
In addition to the minimum salary and salary basis requirement, a position must meet certain duties tests specific to each exemption:
| Executive exemption |
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| Administrative exemption |
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| Professional exemption | Learned professional (examples include accountant, attorney, nurse and engineer):
Creative professional (examples include composer, singer and graphic designer):
Teachers, doctors and artists may also qualify for the professional employee exemption. The salary basis requirements do not apply to teachers, licensed/certified practitioners of law and medicine, medical interns and residents. |
| Computer-related occupation exemption |
|
| Highly compensated employee exemption |
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| Outside sales exemption |
|
Combination exemption. When an employee performs a combination of exempt duties that fall under the executive, administrative, professional, outside sales and computer employee exemptions, he or she may qualify under a combination exemption.
When an employee performs a combination of duties that fall under both exempt and nonexempt work, the employee's primary duty will determine whether an overtime exemption applies. The employee's primary duty must be the performance of exempt work in order for the minimum wage and overtime white-collar exemptions to apply. See DOL Opinion Letter FLSA 2005-14.
Industry exemptions
The FLSA also provides overtime exemptions that apply by industry. Summaries of the more commonly used industry exemptions include the following:
Agricultural activities or operations. The FLSA exempts from minimum wage and overtime pay requirements certain employees who are employed in agriculture or in certain related activities or in certain operations with respect to agricultural or horticultural commodities.
- The employee must be employed by a retail or service establishment.
- The employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage under Section 6 of the FLSA.
- More than half of the employee’s total earnings in a representative period must consist of commissions on goods or services.
- Employed by a motor carrier or motor private carrier, as defined in 49 U.S.C. Section 13102.
- Drivers, driver's helpers, loaders or mechanics whose duties affect the safety of operation of motor vehicles in transportation on public highways in interstate or foreign commerce.
- Not covered by the small vehicle exception.
Positions Not Eligible for Exemption
There are certain types of positions that the DOL considers to be outside the scope of any exemption and, therefore, eligible for overtime.
Blue-collar workers
Manual laborers or other blue-collar workers "who perform work involving repetitive operations with their hands, physical skill and energy" are entitled to overtime. Examples of such blue-collar workers include "non-management production-line employees and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operation engineers, longshoremen, and construction workers."
First responders
The white-collar exemptions also do not apply to certain first responders, such as police officers, fire fighters, paramedics, emergency medical technicians, ambulance personnel and rescue workers, "regardless of rank or pay level, who perform work such as preventing, controlling or extinguishing fires of any type; rescuing fire, crime or accident victims; preventing or detecting crimes; conducting investigations or inspections for violations of law; performing surveillance; pursuing, restraining and apprehending suspects; detaining or supervising suspected and convicted criminals, including those on probation or parole; interviewing witnesses; interrogating and fingerprinting suspects; preparing investigative reports; or other similar work."
Other workers
Inside sales employees are entitled to overtime under the FLSA regulations. The DOL expressly states in the preamble to the regulations that it "does not have statutory authority to exempt inside sales employees from the FLSA minimum wage and overtime requirements under the outside sales exemption."
Generally, paralegals and legal assistants are entitled to overtime. For a discussion of a particular paralegal position the DOL concluded was entitled to overtime, see DOL Opinion Letter FLSA 2005-54.
Many executive and administrative assistants are entitled to overtime. For a discussion of several administrative assistant positions in state employment in which the DOL concluded some were and some were not entitled to overtime, see DOL Opinion Letter FLSA 2006-23NA.
For additional guidance see DOL Wage and Hour Division Final Rulings and Opinion Letters.
State Overtime Laws
A few states, such as California and New York, have overtime exemption criteria that conflict with the FLSA. Multistate employers should check applicable state laws to ensure compliance with both federal and state law. See Multistate Law Comparison Tool.
Additional Resources
FLSA Exempt/Nonexempt Questionnaire
When can deductions be made from exempt employees' salary?
May an employer require an exempt employee to record hours and work a specified schedule?
What is meant by the terms "exempt," "non-exempt," "salaried" and "hourly"?
Can I pay exempt employees extra without jeopardizing their exempt status?
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