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Exemptions from overtime provisions – Executive exemption

Exemptions from overtime provisions – Executive exemption

By on Jul 28, 2016 in Blog, Compensation Consulting | 0 comments

The new overtime provisions include a new salary test of $47,476.  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.  This update will discuss what is known as the Executive exemption [the current Fact Sheet still reflects the OLD salary threshold; disregard it and focus on the other elements of the exemption test].

To be deemed to have passed the test for the Executive exemption, 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 managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise.
  • The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent.
  • The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

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.

Do you need assistance with this or other compensation consulting needs? Contact us and check out our blog for more helpful resources.