To qualify the professional exemption to the federal overtime requirements, an employee must meet the salary basis and two primary duty requirements for the exemption. An employee only needs to negate one required element to defeat the professional exemption. Ader v. SimonMed Imaging Inc., 465 F. Supp. 3d 953, 961 (D. Ariz. 2020); Kress v. PricewaterhouseCoopers LLP, 2013 WL 140102, at *5 (E.D. Cal. Jan. 10, 2013).
To meet the “salary basis” test, an employee must consistently earn the same amount each pay period regardless of quantity or quality of work. As of July 1, 2024, the minimum salary that an exempt administrative employee must receive is $844 per week or $43,888 per year. As of January 1, 2025, the salary threshold is set to increase to $1,128 per week or $58,656 per year.
The FLSA requires the use of a three-part primary duty test to analyze whether workers are employed as exempt professionals. First, the employee’s primary duty must require “advanced knowledge.” Second, that advanced knowledge must come from a “field of science or learning.” Third, the acquisition of such “advanced knowledge” must come from a “prolonged course of intellectual instruction.” 29 U.S.C.§ 29 U.S.C. 213(a)(1).
An employee’s primary duty must be “work requiring advanced knowledge” to qualify as an exempt professional. The regulations explain that such work is “predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment, as distinguished from performance of routine mental, manual, mechanical or physical work. An employee who performs work requiring advanced knowledge generally uses the advanced knowledge to analyze, interpret or make deductions from varying facts or circumstances. Advanced knowledge cannot be attained at the high school level.” 29 C.F.R. § 541.301(b).
The regulations provide examples of “directly related” work, which includes “work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; legal and regulatory compliance; and similar activities.” 29 C.F.R. § 541.203(b).
The regulations also make clear that an employee may qualify for the administrative exemption where his primary duty is “directly related to the management or general business operations of their employer’s customers.” The regulation cites as examples, “advisers or consultants to their employer’s clients or customers (as tax experts or financial consultants, for example) may be exempt.” 29 C.F.R. § 541.203(c).
To be considered as exempt, an employee’s primary duty must (1) include discretion and independent judgment; and (2) include making decisions with respect to “matters of significance” to the employer. 29 C.F.R. § 541.200(a)(3). The first part of this test assesses the type of work performed and second part of the test assesses the importance of the work performed to the employer.
To be considered exempt, an administrator’s primary duty must include the discretion and independent judgment. The exercise of discretion and independent judgment is defined by the regulations as involving “the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered.” 29 C.F.R. § 541.202(a).
Second, the “advanced knowledge” required must also be from a “field of science or learning” to be an exempt professional. The regulations explain that “field of science or learning” includes “the traditional professions of law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, various types of physical, chemical and biological sciences, pharmacy and other similar occupations that have a recognized professional status.” 29 C.F.R. § 301(c). The regulation distinguishes these fields from “the mechanical arts or skilled trades where in some instances the knowledge is of a fairly advanced type, but is not in a field of science or learning.” 29 C.F.R. § 541.301(c).
To qualify for the professional exemption, an exempt professional’s primary duty must not only involve “work requiring advanced knowledge” that knowledge must also be “customarily acquired by a prolonged course of specialized intellectual instruction.” The regulations explain that this phrase “restricts the exemption to professions where specialized academic training is a standard prerequisite for entrance into the profession.” 29 C.F.R. § 541.301(d).
The regulation further explains that the exemption is unavailable for “occupations that customarily may be performed with only the general knowledge acquired by an academic degree in any field, with knowledge acquired through an apprenticeship, or with training in the performance of routine mental, manual, mechanical or physical processes. The … exemption also does not apply to occupations in which most employees have acquired their skill be experience rather than by advanced knowledge.” 29 C.F.R. § 541.301(d).
29 C.F.R. § 541.301(f) explains that the areas in “which the professional exemption may be available are expanding. As knowledge is developed, academic training is broadened and specialized degrees are offered in new and diverse fields, thus creating new specialists in particular fields of science or learning. When an advanced specialized degree has become a standard requirement for a particular occupation, that occupation may have acquired the characteristics of a learned profession.” Accordingly, the professional exemption will continue to expand to include more occupations where an advanced degree is a prerequisite for the occupation in the future.
29 C.F.R. § 541.203(a)–(f) provide examples of workers who “generally meet the duties requirements for the administrative exemption” (listing categories of workers and some duties they perform). Workers identified as generally meeting the administrative exemption include: insurance claims adjusters, as long as they have settlement authority); financial services employees, as long as they conduct analysis and are not limited to selling financial products; team leaders assigned to complete major projects; executive assistants who work without “specific instructions or prescribed procedures” and have delegated authority on significant matters; human resource managers who do more than gather information to “screen” job applicants against minimum requirements; and purchasing agents who have the authority to bind a company on significant purchases.
