Overview: Under the Fair Labor Standards Act (FLSA), most employees must be paid overtime when they work more than 40 hours in a workweek. However, there are exemptions to this general rule. One of the most commonly applied, and also most frequently misapplied, is the exemption for administrative employees.
When the FLSA was first enacted back in 1938, the line between exempt administrative employees and nonexempt workers was relatively clear. Administrative employees assisted with the running or servicing of the business, while nonexempt employees worked on a manufacturing production line or sold a product in a retail or service establishment.
But when the FLSA regulations were amended in 2004, the US Department of Labor (DOL) downplayed this distinction. Although it is still a relevant and useful tool in the modern economy, it is not the final word, the DOL said. Rather, when classifying employees, employers must carefully consider all of the requirements for the administrative exemption.
This can prove quite challenging for HR professionals tasked with employee classification, since many of the key terms used to define the exemption are open to interpretation.
Trends: The US Department of Labor (DOL) is expected to issue new FLSA regulations that will raise the minimum salary for overtime-exempt administrative employees.
Author: Michael Cardman, Legal Editor
Updated to reflect a Supreme Court ruling concerning an overtime exemption for auto dealership service advisors.
Updated to reflect soon-to-be proposed rules that would increase the minimum salary for most overtime-exempt workers.
Updated to reflect the overtime and recordkeeping exemption for employees of seasonal amusement and recreational establishments, effective January 1, 2018.
Updated to reflect the increase in the minimum salaries for overtime-exempt executive and administrative employees, effective December 31, 2017.
Updated to reflect the 2018 increase in the minimum salary for overtime-exempt executive, administrative and professional employees, effective January 1, 2018.
Updated to reflect the 2018 annual inflation adjustment to the minimum salaries for overtime-exempt executive, administrative and professional employees, effective January 1, 2018.
Updated to reflect the 2018 annual inflation adjustments to the minimum salaries for overtime-exempt executive employees, administrative employees and professional employees, and amendments to the overtime exemption for private elementary and secondary school teachers, effective January 1, 2018.
Updated to reflect the 2018 increase in the minimum salary for overtime-exempt executive / supervisory employees, effective January 1, 2018.
Updated to reflect the repeal of the overtime exemption for parking lot and garage attendants under the Wage Theft Prevention Clarification and Overtime Fairness Amendment Act of 2016, effective April 7, 2017.
Updated to reflect technical amendments to the minimum wage and overtime exemption for certain employees of seasonal and recreational establishments, effective March 21, 2017.
HR guidance on complying with the federal and state requirements for the administrative exemption.