Overview: 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. 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:
Trends: The US Department of Labor (DOL) has proposed regulations that would, if finalized, increase the minimum salary from $455 per week to $679 per week (or from $23,660 per year to $35,308 per year). The proposed regulations also would allow employers to count nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level test, as long as they are paid annually or more frequently. The DOL projects the regulations will take effect January 2020.
Author: Michael Cardman, Legal Editor
Updated to reflect an amendment to the minimum wage and overtime exemptions, effective July 3, 2019.
Updated to reflect an amendment to the minimum wage and overtime exemptions, effective July 1, 2019.
Updated to reflect the repeal of certain minimum wage exemptions, effective July 1, 2019.
Updated to reflect amendments to the salary basis test, effective May 6, 2019.
Updated to reflect the repeal of a minimum wage and overtime exemption, effective June 14, 2019.
Updated to reflect proposed rules that would increase the minimum salary and update the duties tests for most overtime-exempt workers.
The Washington State Department of Labor & Industries issued draft regulations, under which the minimum salary for executive, administrative, professional and outside sales employees would increase from the current level of $23,660 to $49,140 for large employers and to $35,100 for small employers, effective July 1, 2020.
Updated to reflect an amendment to the overtime exemptions, effective May 21, 2019.
Updated to reflect information on a Supreme Judicial Court of Massachusetts ruling concerning the scope of the overtime exemption for employees engaged in agricultural and farm work.
HR guidance on complying with the federal and state requirements for the executive exemption.