Exemptions from overtime provisions – Administrative exemption

Exemptions from overtime provisions – Administrative exemption

By on Aug 25, 2016 in Blog, Compensation Consulting | 0 comments

In last month’s update, we reviewed the duties test for the Executive exemption and will now be moving on to the Administrative exemption [the current Fact Sheet still reflects the OLD salary threshold; disregard it and focus on the other elements of the exemption test]. The updated overtime provisions include a new salary threshold of $47,476, but the duties tests have remained unchanged, so when analyzing a job to determine if the position is exempt from overtime, you must also ensure that the duties tests are met in addition to the new salary threshold.

To meet the requirements of the Administrative exemption job duties, ALL of the following tests must be met:

  • The employee must be compensated on a salary basis [no less than the new minimum]
  • The employee’s primary duty must be 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
  • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance

The job must meet ALL of these requirements…not just some.  The US Department of Labor is very aggressive at enforcing this…and assesses significant penalties, especially if an employer willfully misclassifies employees as exempt from overtime.

For complete details on this exemption and to learn more about other exemptions, visit the Wage and Hour division of the US Department of Labor.

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