HR Support on the FLSA Executive Exemption

Editor's Note: The executive exemption is not just for CEOs; lower-level supervisors can be exempt from overtime, too.

Michael CardmanOverview: In the popular imagination, the word executive brings to mind images of a CEO or a company president, sitting in the corner office and overseeing hundreds or even thousands of employees. But under the Fair Labor Standards Act (FLSA), employees who supervise as few as two full-time employees can also qualify as executives under the employee classification definition. For this reason, a variety of employees one might not normally think of as executives - such as convenience store managers, chefs and construction superintendents - can qualify as executives and be exempt from the law's overtime requirements.

Besides directing the work of two or more employees, executives must also:

  • Be compensated on a salary basis;
  • Have a primary duty of managing the business or a recognized department or subdivision of the business; and
  • Make, or at least influence, hiring and firing decisions.

Trends: Effective December 1, 2016, the minimum weekly salary for overtime-exempt executive employees will increase from $455 to $913. Starting in 2020, and every three years thereafter, the minimum salary level will be automatically adjusted based on the 40th percentile level of full-time salaried workers in the lowest-wage Census region.

Author: Michael Cardman, Legal Editor

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