Employee Classification: Federal
Author: Kirsten McCaw Grossman, Nukk-Freeman & Cerra, PC
- The classification of employees as exempt or nonexempt under the Fair Labor Standards Act (FLSA) is one of the most complex and difficult issues in federal wage and hour law. The purpose of this section is to assist HR professionals in determining whether employees qualify for any of the exemptions from the FLSA's overtime and/or minimum wage requirements.
- Classifying an employee as exempt allows an employer to avoid paying overtime when the employee works more than 40 hours in a given workweek. However, employers that misclassify employees as exempt leave themselves vulnerable to lawsuits and U.S. Department of Labor (DOL) investigations. See The Importance of FLSA Classification.
- When classifying an employee, it is the employee's job duties, not his or her title, that matter. See Primary Duty.
- The most commonly applied exemptions are for executives, administrators, professionals, computer employees, outside salespersons and commissioned salespersons. See Executive Employees; Administrative Employees; Professional Employees; Computer Employees; Outside Salespersons; and Commissioned Salespersons. With a few exceptions, all of these exempt employees must be paid on a salary basis or a fee basis. See The Salary Basis Test.
- There are several other more narrow exemptions, including exemptions for transportation employees, farmers and other agricultural workers, companionship services providers, police officers and firefighters. See Other Exempt Employees.
- Certain types of workers - including independent contractors, volunteers, trainees and interns - lie beyond the scope of the FLSA. They are not considered employees under the law. Therefore, there is no requirement that they be paid the minimum wage or overtime and there is no need to classify them as exempt or nonexempt. See Independent Contractors, Volunteers, Trainees, Interns and Other Non-Employees.
- This section will review the federal requirements: the statute of the FLSA and interpretive regulations issued by the DOL. However, employers also must comply with any state requirements that are more stringent than the FLSA. While some states' labor laws are drafted and construed to align with the FLSA, others are not. Therefore, employers should ensure that their particular state will allow a particular exemption under state wage and hour law. See State Requirements.
The following states have additional requirements for this topic under applicable state law.
Your Preferred States
- South Dakota
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- West Virginia
- District of Columbia
- Rhode Island