Catalog of Sample Policies for Pennsylvania's Conservation Districts

Exempt vs. Nonexempt Employees (Reference 3)
(Excerpted from "Labor Pains" by Ethan A. Winning)

Time is money. Overtime is money times 1.5. Vacations and holidays are money for which no work is done. Then there's sick leave, maternity leave, jury duty, and all kinds of other time away from the job.

It's no wonder that time at work, time away from work, and the accrual of various periods of time off are of concern to employers and employees. And, it does indeed get confusing. There is basically one federal law which regulates time, The Fair Labor Standards Act of 1938 (which also regulates child labor), but many states have their own regulations which go beyond federal law. So, in addition to trying to figure out who is exempt or not exempt (nonexempt) from that federal law, one must also make a determination as to who is exempt or not exempt from state regulations.

As much as eighty percent of all questions regarding conditions of employment, e.g., hours of work, vacations, etc., have to do with overtime. While exemptions from the federal Fair Labor Standards Act are often difficult to understand (and determine), overtime regulations are fairly straight-forward but for some reason continue to create confusion. Failure to pay overtime is one of the leading causes of claims against employers, probably more than wrongful discharge, harassment, and stress combined. That of course is not so unusual since potential problems with overtime come with every pay period.

The reader should note that there are many exemptions to the state laws and wage orders. Examples: In Arkansas, employees who work for hotels, motels and restaurants do no receive overtime until they work in excess of 48 hours in a week; and in Pennsylvania, salespersons, parts men and mechanics in retail car dealerships as well as taxi drivers, radio and television news editors and announcers are exempt from the overtime provisions. In other words, every state with overtime laws has exemptions having nothing to do with the federal Fair Labor Standards Act.

There are three classifications of exemption from the FLSA: Exempt Executive (or Managerial), Exempt Administrative, and Exempt Professional. There are five or six criteria for each exemption and all must be met simultaneously. If an employee does not meet even one of the criteria, he or she is not exempt (non-exempt) from the provisions of the law. Last, title is of no significance at all, and wages are the least important provision. One need only make $1,150 a month to meet the wage criteria.

Paraphrased from the law, the criteria for being an Exempt Executive are as follows:

• The primary duty consists of the management of an enterprise or of a customarily recognized department or division by which he is employed;
• and who customarily and regularly directs the work (i.e., supervises) two or more employees;
• and who has the authority to hire and fire other employees, or whose word in such decisions is given weight; and who customarily and regularly exercises discretionary powers;
• and who does not devote more than 20% of his hours to work described in (1)-(3);
• and who is compensated on a salary basis of not less than $1,150 a month.

An Exempt Administrative Employee is:

• one whose primary duty consists of the performance of office or non-manual work directly related to management policies or general business operations of his employer or his employer's customers;
• and who customarily and regularly exercises discretion and independent judgment;
• and who performs only under general supervision;
• or whose work is along specialized or technical lines requiring specialized training, experience or knowledge;
• and/or who executes special assignments and tasks under only general supervision; and who is compensated at the rate of $1,150 a month.

Exempt Professional Employees are:

• those employed in a bona fide professional capacity whose primary work requires knowledge of an advanced type in a field of science or learning customarily acquired through a prolonged course of intellectual instruction and study, as distinguished from a general academic education and from training in the performance of routine mental, manual or physical processes;
• and/or work that is original and creative in character in a recognized field;
• and whose work requires discretion or judgment in its performance; and work which is predominantly intellectual and varied in character and is of such character that the output produced cannot be standardized in relation to a given period of time;
• and who does not devote more than 20% of his time to nonexempt activities;
• and who is compensated at the rate of $1,150 a month.

The Professional Exemption has usually been relegated to thirteen professions (including teaching) which normally require licenses to practice; e.g., law, medicine, psychologist, etc. Reduced even further, most employees who supervise two or more persons, who can hire and fire, who supervise a specialized function, who are professionally licensed and, most important, who regularly make decisions or judgments without prior approval, and who are paid the pittance required will be exempt.

The titles Administrative Assistant, Secretary, Executive Secretary or Office Manager mean nothing by themselves. If all the criteria are met, then the employee would be exempt, keeping in mind the provision that up to one day in five can be worked in non-exempt endeavors.

The requirements of the Fair Labor Standards Act are just one more reason why job descriptions are so important even in the smallest of companies.