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How to Determine if an Employee is Exempt From Overtime Pay

ederal Law - Definition of an Exempt Employee

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What is an Exempt Employee?

The simplest definition of an “exempt” employee is an employee who is not eligible to receive overtime pay. In most cases, this will also mean the employee receives a salary.

Salaried Workers Are Usually Exempt Employees

The term “salaried employee” is often used in place of “exempt” to describe an employee but this is not entirely accurate. There are certain situations where salaried workers may be also entitled to overtime pay (and situations where hourly workers may not always be eligible for overtime pay).

An exempt employee is never determined by their job title or even whether or not they are salaried or paid by the hour. An exempt employee is determined using a combination of criteria including their occupation (or industry), rate of pay, and the job duties that they perform. But if a position is considered exempt, Federal law requires exempt employees to be compensated with a salary, with one exception: certain computer professionals.

How Federal Law Defines Exempt Employees

There is considerable room for interpretation of employees when it comes to whether they are exempt or nonexempt. To make things more confusing for employers, individual state laws may vary (but state laws are generally more favorable to employees than federal laws).

For legal and practical purposes, this article outlines only the minimum federal standards used to determine if an employee is exempt or nonexempt.

General guidelines for determining exempt employees who are not eligible for overtime pay (and therefore must be paid a salary) include:

  • “White-collar” employees who earn more than $455 per week. A “white collar” employee is generally considered someone whose job does not require manual labor but that does require consistent and significant knowledge, or an employee whose job requires mostly mental or clerical work.

    White collar positions typically require independent action and use of decision-making and judgment skills on the job.

  • Employees who routinely perform exempt or other “professional” duties (including executive or managerial or administrative duties) and earn more than $100,000 per year.

  • Most sales professionals.

Additionally, legislative changes enacted in 2004 under the Bush administration may also classify nurses, line leaders, and team leaders as exempt positions, even if they are not technically classified as “management.”

Who Can I Contact if I have Questions or Problems About Overtime Pay”

Contact the U.S. Department of Labor, Wage and Hour Division if you are an employer or employee of any of the following:
  • Private Business Sector,
  • State and Local Governments,
  • Federal Employees of the Library of Congress,
  • U.S. Postal Service,
  • Postal Rate Commission, or
  • Tennessee Valley Authority.
All other Federal employees should contact the U.S. Office of Personnel Management. The U.S. Congress is responsible for handling employee/employer issues for congressional employees.

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