The Fair Labor Standards Act (FLSA) sets standards for overtime pay and overtime exemptions from such pay. While the FLSA is designed to protect workers, the law exempts certain employees from its protections, meaning such employees are not entitled to overtime pay. These exemptions can be categorized into several groups. The most well-known are the white-collar exemptions. However, there are also other statutory exemptions, such as those for transportation workers and workers in other specialized industries. This article provides an overview of FLSA exemptions, including the primary categories of exemptions and how the specific exemptions work in each category.
The FLSA provides several “white-collar” overtime exemptions, which apply to employees who meet specific requirements to be exempt from federal overtime pay requirements. The white-collar exemptions include exemptions for computer and outside sales employees. However, the three primary white-collar exemptions under the FLSA are for executive, administrative and professional employees (“EAP Exemptions”). To qualify for the EAP exemptions, the employee’s pay must meet the salary basis test and primary duty test for the specific exemption. These tests are based on regulations set by the U.S. Department of Labor (“DOL”).
Primary Duty Test: To qualify for the EAP white-collar exemptions, an employee must also perform exempt work as his or her primary duty. Primary duty means “the principal, main, major or most important duty that the employee performs.” The DOL has taken the position that the percentage of time an employee spends on exempt tasks is a valuable indication of an employee’s primary duty. Employees who engage in exempt work for over 50 percent of their working hours typically meet the criteria for the primary duty test.
Executive Exemption: The employee’s primary duty must be managing a business or department, duties must include regularly supervising two or more employees, and the employee must have the authority to hire, fire or make significant employment decisions.
Administrative Exemption: To be considered an exempt administrator, an employee must (1) have a primary duty that is directly related to the management or general business operations of the employer or the employer’s customer; (2) the primary duty must involve the exercise of discretion and independent judgment; and (3) and the exercise of discretion and independent judgment must be with respect to a matter of significance.
Professional Exemption: To qualify as a learned professional, an employee must (1) have a primary duty that involves the performance of work requiring “advanced knowledge,” (2) the “advanced knowledge must be in a field of science or learning; and; and (3) the advanced knowledge must be customarily acquired by a prolonged course of study.
Salary Basis Test: To qualify for the EAP Exemptions, an employee must be paid a specific amount of money on a “salary basis.” The FLSA defines “salary basis” to mean a fixed amount earned each pay period, regardless of the days or hours worked. A worker must also be paid a certain amount to qualify as exempt. As of July 1, 2024, salary threshold to qualify for these exemptions is $844 per week or $43,888 per year. The salary threshold is set to increase to $1,128 per week or $58,656 per year on January 1, 2025.
The FLSA’s transportation exemptions are designed to exclude certain employees in the transportation industry from overtime pay requirements. These exemptions are tailored to specific job roles and activities associated with transportation or the movement of goods. They are governed by a combination of statutory provisions and regulatory guidelines issued by the U.S. Department of Labor.
Motor Carrier Act Exemption: The FLSA provides an overtime exemption for employees who are within the authority of the Secretary of Transportation. The exemption is aimed primarily at the trucking industry. For the MCA exemption to apply, the (1) employer must be a motor carrier or private motor carrier; (2) the employee’s job duties must affect the safety of operation or a motor vehicle; and (3) the employee was reasonably expected to travel interstate for the employer. The exemption has been interpreted to apply to any driver, driver’s helper, loader or mechanic employed by a carrier whose duties affect the safety of operation of motor vehicles in the transportation on public highways of passengers or property in interstate or foreign commerce.
Rail Employee Exemption: Section 13(b)(3) of the FLSA specifically exempts employees “of a carrier by air subject to the provisions of title II of the Railway Carrier Act.” These exemptions are meant to apply to employees whose work is directly related to interstate transportation by rail or air. Similar to the motor carrier exemption, employees who engage in duties like loading, unloading, or maintaining railcars or aircraft used in interstate commerce may be exempt from overtime pay. A similar exemption exists for airline employees.
Seaman Exemption: Section 13(b)(6) exempts individuals “employed as seaman.” The regulations explain that an individual is “ordinarily” employed as a seaman where he performs “service which is rendered primarily as an aid in the operation of such vessel as means of transportation….” The regulations further explain that “seaman” includes “members of the crew such as sailors, engineers, radio operators, firemen, pursers, surgeons, cooks, and stewards if” they aid in the operation of a vessel.
The FLSA has exemptions for employees employed in agriculture. To qualify for the exemption, the worker must be involved in agricultural activities. The requisite activities include the cultivation of crops, raising of animals and activities like painting, cultivating, harvesting, and handling farm products. The exemption does not apply if the worker is engaged in activities other than primary agricultural duties, such as processing or marketing products.
The FLSA also has an exemption for commissioned employees in a retail establishment. This is known as the “Section 7(i)” or “retail sales” exemption. To qualify for the exemption, the employee must (1) be employed by a retail or service establishment; (2) the employee’s regular rate of pay must be over 1.5 the minimum wage for every hour worked in a workweek in which overtime hours are worked; and (3) more than half the employee’s earnings in a representative period must consist of commissions.
The FLSA has many other exemptions that cover a broad range of activities across numerous industries and professions. These occupations include newspaper deliverers, seasonal amusement employees, taxi drivers, domestic service workers who reside at the employer’s residence, and motion picture theatre workers.
In addition to federal exemptions under the FLSA, some states may have additional exemptions or stricter standards. For example, certain states may have broader definitions for exempt positions or may raise the minimum salary threshold. Employers and workers should be mindful of both federal and state laws to ensure compliance.
For example, California’s exemptions are similar to federal ones but are more stringent in some areas. This is particularly true for the executive, administrative, and professional overtime exemptions. For example, under the FLSA, registered nurses are presumptively considered to be non-exempt under the professional exemption. However, registered nurses presumptively do not qualify for the professional exemption under California law. California also has higher salary thresholds for these exemptions than required under federal law.
Similarly, other states like New Mexico have not adopted all of the FLSA exemptions, including the Motor Carrier Act exemption. Indeed, workers exempted from overtime under the FLSA’s federal Motor Carrier Act (FMCA) exemption have been held to be entitled to overtime under New Mexico Overtime Law. Courts have consistently upheld overtime state laws like those in New Mexico that are more protective to workers than federal law.
Our unpaid overtime attorneys based in Dallas, Texas have national unpaid overtime litigation experience in federal courts throughout the United States. Mr. Siegel has personally represented clients in wage and hour suits in at least 20 states, including Alaska, Arizona, California, Colorado, Illinois, Louisiana, Massachusetts, Michigan, Missouri, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Tennessee, Texas, and Virginia.