Walsh-Healy Act of 1936Walsh-Healy Act of 1936

•Workers employed on government contracts in excess of $10,000 must be paid overtime of 1.5 times the regular rate for all work in excess of 8 hours in one day or forty hours in one week

The Fair Labor Standards The Fair Labor Standards Act:Act:Executive, Administrative Executive, Administrative and Professional and Professional ExemptionsExemptions

Wage and Hour DivisionEmployment Standards

AdministrationU.S. Department of Labor

Fair Labor Standards ActFair Labor Standards Act

•Federal Minimum Wage: $7.25 per hour

•Overtime: 1 ½ times the regular rate of pay for all hours over 40 hours in a work week

““White Collar” White Collar” ExemptionsExemptions

•Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees who are employed in a bona fide:

Executive;Administrative;Professional; orOutside Sales capacity.

•Certain computer employees may be exempt professionals under Section 13(a)(1) or exempt under Section 13(a)(17) of the FLSA.

Three Tests for ExemptionThree Tests for Exemption

•Salary Level

•Salary Basis

• Job Duties

Salary LevelSalary Level

Minimum Salary Level: Minimum Salary Level: $455$455

•For most employees, the minimum salary level required for exemption is $455 per week

•Must be paid “free and clear”

•The $455 per week may be paid in equivalent amounts for periods longer than one week:

Biweekly: $910Semimonthly: $985.83Monthly: $1,971.66

Highly Compensated TestHighly Compensated Test

•Total annual compensation of at least $100,000

•At least $455 per week paid on a salary or fee basis

•Perform office or non-manual work

•Customarily and regularly perform any one or more of the exempt duties identified in the standard tests for the executive, administrative or professional exemptions

Salary BasisSalary Basis

Salary Basis TestSalary Basis Test

•Regularly receives a predetermined amount of compensation each pay period (on a weekly or less frequent basis)

•The compensation cannot be reduced because of variations in the quality or quantity of the work performed

•Must be paid the full salary for any week in which the employee performs any work

•Need not be paid for any workweek when no work is performed

ReviewReview

•Minimum Salary Level: $455 per week

•Highly Compensated Level: $100,000 per year

•Salary Basis:A predetermined amount paid for every week in which the employee performs any work, which is not subject to reduction because of variations in the quality or quantity of work performed

•The salary level and salary basis tests do not apply to outside sales employees, doctors, lawyers, teachers, and certain computer-related occupations paid at least $27.63 per hour

Executive DutiesExecutive Duties

Executive DutiesExecutive Duties

•Primary duty is management of the enterprise or of a customarily recognized department or subdivision;

•Customarily and regularly directs the work of two or more other employees; and

•Authority to hire or fire other employees or whose suggestions and recommendations as to hiring, firing, advancement, promotion or other change of status of other employees are given particular weight.

ManagementManagement

• Interviewing, selecting, and training employees

•Setting and adjusting pay and work hours

•Maintaining production or sales records

•Appraising employee productivity and efficiency

•Handling employee complaints and grievances

•Disciplining employees

•Planning and apportioning work among employees

ManagementManagement

•Determining the techniques to be used; the type of materials, supplies, machinery, equipment or tools to be used; or the merchandise to be bought, stocked and sold

•Providing for the safety and security of employees or property

•Planning and controlling the budget

•Monitoring or implementing legal compliance measures

ReviewReview

•Duties requirements for executive exemption:Primary duty of management;Customarily and regularly directs the work of two or more other employees; andAuthority to hire or fire or having suggestions and recommendations as to hiring, firing, advancement promotion or any other change of status to other employees be given particular weight.

•The executive exemption also applies to 20% owners who are actively engaged in management.

Administrative DutiesAdministrative Duties

Administrative DutiesAdministrative Duties

•Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

•Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

Management or General Management or General Business OperationsBusiness Operations

•Refers to the type of work performed by the employee

•Work must be directly related to assisting with the running or servicing of the business

•Does not include working on a manufacturing production line or selling a product in a retail or service establishment

Management or General Management or General Business OperationsBusiness Operations

• Tax• Finance• Accounting• Budgeting• Auditing• Insurance• Quality Control• Purchasing• Procurement• Advertising• Marketing

• Research• Safety and Health• Human Resources• Employee Benefits• Labor Relations• Public and

Government Relations• Legal and Regulatory

Compliance• Computer Network,

Internet and Database Administration

ReviewReview

•Primary duty of the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

•Primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

Learned Professional Learned Professional DutiesDuties

Learned ProfessionalLearned Professional

•The employee’s primary duty must be the performance of work requiring advanced knowledge

• In a field of science or learning

•Customarily acquired by a prolonged course of specialized intellectual instruction

Advanced KnowledgeAdvanced Knowledge

•Predominately intellectual in character

• Includes work requiring the consistent exercise of discretion and judgment

•The advanced knowledge is generally used to analyze, interpret or make deductions from varying facts or circumstances

•Not work involving routine mental, manual, mechanical, or physical work

•Cannot be attained at the high school level

Field of Science or Field of Science or LearningLearning

•Occupations with recognized professional status, as distinguished from the mechanical arts or skilled trades

Law Accounting Actuarial Computation

Theology Teaching Physical Sciences

Medicine Architecture Chemical Sciences

Pharmacy Engineering Biological Sciences

Other Exempt ProfessionsOther Exempt Professions

•Lawyers•Teachers•Accountants•Pharmacists•Engineers•Actuaries•Chefs•Athletic trainers•Licensed funeral directors or embalmers

Creative Professional Creative Professional DutiesDuties

Creative Professional Creative Professional DutiesDuties

•The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor

Recognized Field of Artistic Recognized Field of Artistic or Creative Endeavoror Creative Endeavor

•MusicMusicians, composers, conductors, soloists

•WritingEssayists, novelists, short-story writers, play writersScreen play writers who choose their own subjectsResponsible writing positions in advertising agencies

•Acting

•Graphic ArtsPainters, photographers, cartoonists

For More InformationFor More Information

•Other resources on the Part 541 exemptions are available at www.dol.gov\fairpay

RegulationsPreambleFact SheetsField Operations HandbookFrequently Asked Questions

•To ask a specific question or register a comment:

Email: fairpay@dol.govTelephone, toll-free: 1-866-4US-WAGE

When are pay raises required?When are pay raises required?

•Pay raises are generally a matter of agreement between an employer and employee (or the employee's representative). Pay raises to amounts above the Federal minimum wage are not required by the FLSA.

When must breaks and meal When must breaks and meal periods be given?periods be given?

•The FLSA does not require breaks or meal periods be given to workers. Some states may have requirements for breaks or meal periods. If you work in a state which does not require breaks or meal periods, these benefits are a matter of agreement between the employer and the employee (or the employee's representative).

How many hours per day or per How many hours per day or per week can an employee work?week can an employee work?

•The FLSA does not limit the number of hours per day or per week that employees aged 16 years and older can be required to work.

When is double time due? When is double time due?

•The FLSA has no requirement for double time pay. This is a matter of agreement between an employer and employee (or the employee's representative).

Is extra pay required for Is extra pay required for weekend or night work?weekend or night work?

• Extra pay for working weekends or nights is a matter of agreement between the employer and the employee (or the employee's representative). The FLSA does not require extra pay for weekend or night work. However, the FLSA does require that covered, nonexempt workers be paid not less than time and one-half the employee's regular rate for time worked over 40 hours in a workweek.