Coverage under the FLSA

Most jobs are governed by the FLSA. Some are not. Some jobs are excluded from FLSA coverage by statute. Other jobs, while governed by the FLSA, are considered "exempt" from the FLSA overtime rules.

Exclusions from FLSA coverage.

Particular jobs may be completely excluded from coverage under the FLSA overtime rules. There are two general types of complete exclusion. Some jobs are specifically excluded in the statute itself. For example, employees of movie theaters and many agricultural workers are not governed by the FLSA overtime rules. Another type of exclusion is for jobs which are governed by some other specific federal labor law. As a general rule, if a job is governed by some other federal labor law, the FLSA does not apply. For example, most railroad workers are governed by the Railway Labor Act, and many truck drivers are governed by the Motor Carriers Act, and not the FLSA. Many of the FLSA exclusions are found in §213 of the Act.

Exempt or Nonexempt.

Employees whose jobs are governed by the FLSA are either "exempt" or "nonexempt." Nonexempt employees are entitled to overtime pay. Exempt employees are not. Most FLSA employees are "nonexempt."

Some jobs are exempt by statutory definition. For example, "outside sales" employees are exempt ("inside sales" employees are nonexempt). For many FLSA employees, however, whether they are exempt or nonexempt depends on (a) how they are paid and also (b) what kind of work they do.

With a few exceptions, to be exempt an employee must (a) be paid on a salary basis, and also (b) perform exempt job duties. These phrases are defined in the Act (and the Regulations). An employee who is not paid on a salary basis is nonexempt no matter what kind of work s/he does. However, being paid on a salary basis is not the same as being exempt. An employee who is paid on a salary basis is exempt only if s/he also performs exempt job duties.

Salary basis pay.

Generally, an employee is paid on a salary basis if s/he has a "guaranteed minimum" amount of money s/he can count on receiving for any work period during which s/he performs "any" work. With a few exceptions, the base pay of a salary basis employee may not be reduced based on the "quality or quantity" of work performed (provided that the employee does "some" work in the work period). For example, a salary basis employee should receive the same base pay if s/he works 30 hours in a work period as if s/he worked 35 hours in a work period. This is sometimes called the "no docking" rule.

The FLSA prohibition against reducing the base pay of salaried employees applies only to reductions in monetary amounts. Requiring an employee to charge absences from work to leave accruals is not a reduction in base pay, because the monetary amount of the employee's paycheck remains the same. Similarly, paying an employee more when s/he works more than the normal number of hours is not normally inconsistent with salary basis pay status, because that does not result in any reduction in the base pay.

Base pay may be reduced under certain circumstances without compromising the salary basis pay status of an employee. The salary basis pay rules are primarily designed to prohibit reductions in base pay for absences from work occasioned by the employer. Work absences occasioned by the employee may sometimes validly result in reductions in the salary without changing the employee's salary basis pay status. For example, a salary basis employee's pay may be reduced for absences of a day or longer (but not for partial day absences) for personal reasons, or for sickness under a bona fide sick leave plan. Salary may not be reduced, however, for absences caused by lack of work, or "furloughs" or layoffs, or disciplinary suspensions (provided that the employee does "some" work in the work period).

The FLSA Regulations provide that actual reductions in pay are not strictly necessary to compromise an employee's salary basis pay status (and thus the employee's exempt status if s/he also performs exempt job duties). An employee is not paid on a salary basis if the base pay is "subject to" reduction for reasons inconsistent with salary basis pay status. This does not mean a merely theoretical possibility that an employee's base salary might be reduced for absences. However, it is possible that an employee's pay is subject to reduction if there is an actual practice by the employer of docking the salaries of similar employees, or if there is a specific employment policy requiring reductions in salaries of similar employees in specified situations. An actual practice of reductions means a sufficient number of actual instances to show that the employee's pay really will in fact vary depending on the quality or quantity of work performed. An employment policy may also be sufficient to show this, if it is specific to the type of employee involved and equally specific that pay docking "will" (not just "might") result based on the quality or quantity of work performed.

Some "rules of thumb" indicating that an employee is paid on a salary basis include whether an employee's base pay is computed from an annual figure divided by the number of paydays in a year, and whether an employee's actual pay is lower in work periods when s/he works fewer than the normal number of hours. However, whether an employee is paid on a salary basis is a "fact," and thus specific evaluation of particular circumstances is necessary. Whether an employee is paid on a salary basis is not affected by whether pay is expressed in hourly terms (as this is a fairly common requirement of many payroll computer programs), but whether the employee is in fact paid a "guaranteed minimum" amount not subject to impermissible docking based on the quality or quantity of work performed.

The salary basis pay requirement for exempt status does not apply to some of the "learned professions," such as lawyers, doctors, or schoolteachers. These jobs are exempt even if the employees are paid hourly. Another exception is for "computer professionals" (as defined under the Act), who may be exempt if they are paid on a salary basis or if they are paid hourly at a rate of at least $27.63.

Exempt job duties.

A salary basis employee is exempt only if s/he also performs exempt job duties. The FLSA overtime exemptions are limited to employees who perform relatively high-level work involving a good deal of judgment and discretion. Whether the duties of a particular job qualify as exempt depends on what they are. Job titles or position descriptions are of limited usefulness in this determination. (A secretary is still a secretary even if s/he is called an "executive assistant," and the chief executive officer is still the CEO even if s/he is called a janitor.) It is, rather, the actual job tasks that must be evaluated (along with where and how the particular job tasks "fit" into the employer's overall operations). There are three typical categories of exempt job duties, called "executive," "professional," and "administrative."

Exempt executive job duties.

Job duties are exempt executive job duties if the employee (a) regularly supervises two or more other employees, and also (b) is, as a practical matter, "in charge" of a unit or subunit of the organization when on duty. The supervision must be of other employees. Supervising people who are not employees does not count. The supervision must be regular, a normal part of the job, and must be of two or more full-time employees (or enough part-timers to be the equivalent of two full-time employees). In addition, the employee must be "in charge" of a unit or subunit of the organization, such as a "department" or a "shift." This means that the employee is, as a practical matter, "the boss" of the unit or subunit when on duty. As a rule of thumb, if a telephone call comes into the unit or subunit, and the caller asks to speak to "the boss," the employee (at that unit or subunit) to whom the call is forwarded is usually the one "in charge."

Generally, only one person is in charge of a unit or subunit at any particular time. Thus, if an "assistant manager" is never on duty alone, but a "manager" is always on duty at the same time, then only the "manager" is in charge and the "assistant manager" is not. If a sergeant and lieutenant are both on duty at the same time at the same unit or subunit, then the lieutenant is probably the "executive" and the sergeant is not. However, if a sergeant is the highest ranking employee on duty at the unit or subunit at a particular time, s/he is probably the executive at that time even if there is a lieutenant with overall managerial responsibility but who is not actually on duty.

An employee may qualify as performing executive job duties even if s/he performs a variety of "regular" duties in additional to the supervisory responsibilities. For example, the night manager at a fast food restaurant may in reality spend most of the shift preparing food and serving customers. S/he is, however, still "the boss" even when not actually engaged in "active" bossing duties. In the event some "executive" decisions are required, s/he is there to make them, and this is what it means to be "the boss." On the other hand, an employee who holds a fancy title implying that s/he is "the boss" but who does not in fact supervise two or more employees or who is not really "in charge" when on duty is not performing executive job duties. Thus, for example, a "manager" who is "demoted" to a purely production job but retains the job title is not performing executive job duties.

Exempt professional job duties.

Employees are performing exempt professional job duties if their work involves the application of advanced, usually specialized, learning or credentials of the type commonly associated with the "traditional learned professions" such as medicine, law, accounting or engineering. Typically, but not necessarily, a professionally exempt employee will hold a specialized academic degree in the field, and professionally exempt job duties imply that the employee exercises a good deal of judgment and discretion in performing the work. The FLSA distinguishes the exercise of judgment and discretion from the application of particular skills, even high-level skills. A lumber grader, for example, may be highly trained in distinguishing subtle variations in wood but is not performing professionally exempt job duties. On the other hand, the professional exemption is not limited to the traditional learned professions. A "real" computer programmer, for example, is performing exempt professional job duties. Of course, to be professionally exempt even a traditionally credentialed employee must actually "practice" the profession for which s/he is qualified. An engineer doing real engineering work is performing professionally exempt job duties, but an engineer working as a technician is not. An accountant doing accounting is performing professionally exempt work, but a CPA whose job is really bookkeeping is not.

The increasing use of computers in business has generated some "special rules" in the FLSA defining "computer professionals." "Real" programmers, systems analysts, and systems engineers are considered to be performing professional job duties. However, employees are not performing professional job duties merely because they may happen to work with computers. Jobs such as computer installation or troubleshooting computer problems are not typically professionally exempt (although employees in these jobs may be exempt as executives or administrators if their actual job duties fit within those definitions). As noted above, computer professionals are exempt if they are paid on a salary basis, or hourly at a rate of at least $27.63.

Exempt administrative job duties.

The most elusive and imprecise of the definitions of exempt job duties is for exempt administrative job duties. Employees are performing exempt administrative job duties if they do (a) nonmanual or office work which (b) "supports" the overall business operations of the employer, and which (c) involves their exercising independent judgment and discretion on important matters. Administratively exempt work is limited to support or "staff" jobs, as distinguished from "production" or "operations" or "line" jobs. Administrative employees are engaged in work related to company policy or the general operations of the employer, as distinguished from work related to "producing" what the employer "sells." For example, employees involved in preparing a company's payroll are performing administrative work (but not necessarily exempt work), while employees involved in manufacturing products sold to customers are not. A police detective is not performing administrative work. S/he is "doing law enforcement," which is the "product" of a police department. Police officers who work in "records" may be performing administrative work, in "support" of the operational law enforcement mission of the police department. To be exempt, the work must be at a relatively high-level, involve a good deal of judgment and discretion, and be important to the overall operation of the enterprise. An example of administratively exempt work could be the buyer for a department store. S/he performs nonmanual or office work and is not engaged in production or sales. The job involves work which is necessary to the overall operation of the store -- selecting merchandize to be ordered as inventory. It is important work, since having the right inventory (and the right amount of inventory) is crucial to the overall well-being of the store's business. It involves the exercise of a good deal of important judgment and discretion, since it is up to the buyer to select items which will sell in sufficient quantity and at sufficient margins to be profitable. Other examples of administratively exempt employees might be planners and true administrative assistants (as differentiated from secretaries with fancy titles). Bookkeepers, "gal Fridays," many "executive secretaries" and most employees who operate machines or devices are not administratively exempt employees.

Merely clerical work may be administrative, but it is not exempt. Most secretaries, for example, may accurately be said to be performing administrative work, but their jobs are not usually exempt. Similarly, filing, filling out forms and preparing routine reports, answering telephones, making travel arrangements, working on customer "help desks," and similar jobs are not likely to be high-level enough to be administratively exempt. Some primarily clerical workers do in fact exercise some discretion and judgment in their jobs. However, to "count" the exercise of judgment and discretion must be about matters of considerable importance to the operation of the enterprise as a whole. Routinely ordering supplies (and even selecting which vendor to buy paper clips from) is not likely to be considered high-level enough to qualify the employee for administratively exempt status. There is no "bright line." Some "secretaries" may indeed be high-level, administratively exempt employees (if they are paid on a salary basis), while some employees with fancy titles (e.g., "administrative assistant") may really be performing nonexempt clerical duties.

Rights of exempt employees.

An exempt employee has virtually "no rights at all" under the FLSA overtime rules. About all an exempt employee is entitled to under the FLSA is to receive the full amount of the base salary for any work period during which s/he performs "any" work. Nothing in the FLSA prohibits an employer from requiring exempt employees to "punch a clock," or work a particular schedule, or "make up" time lost to absences. Nor does the FLSA limit the amount of work time an employer may require or expect from any employee, on any schedule. ("Mandatory overtime" is not restricted under the FLSA.)

Rights of nonexempt employees.

Nonexempt employees are entitled under the FLSA to time and one-half their "regular rate" of pay for each hour they "actually work" over the applicable FLSA "overtime threshold" in the applicable FLSA "work period."

Each of the quoted words or phrases has a technical definition in the FLSA. To understand what the FLSA requires (and does not require), it is crucial to understand what these technical definitions are. These are covered in the "FLSA Overtime" section of this Website.