§ 3.2.28 White Collar Exemptions. Exemptions from coverage are generally considered to be the most complicated area of the FLSA. Some exemptions suspend the minimum wage and overtime requirements. Other exemptions apply only to the overtime provisions. As already noted, all exemptions must be strictly construed (that is, to favor non-exempt status) and the burden is on the employer to prove the applicability of the exemption.164 Moreover, exemptions do not excuse the employer from the recordkeeping requirements.
Whether an employee is exempt is determined by the employee's actual work activities and not by an employer's characterization of those activities through job descriptions, job titles, or job summaries.165 Moreover, the outline of duties and responsibilities set forth in an employment agreement does not establish exempt status.166
An exempt employee may lose the exempt status if the employee does not perform only exempt duties and responsibilities. In other words, if the exempt employee performs work of employees he or she supervises, or substitutes in a non-emergency situation or engages in work normally performed by striking employees, the individual may lose his or her exempt status.167
Section 13(a)(1)168 exempts so-called white collar workers: executive, administrative (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools) and professional personnel and outside salespersons. Application of this exemption is determined not only by the fact that the employees are well paid or have a specific job title, but also based on specific job duties and responsibilities performed. The employer has the burden of proving that the employee meets all applicable tests for the exemption to be sustained.169
In 2004, the DOL issued regulations regarding the "white collar exemptions" and established minimum weekly earnings for the exemptions to apply ($455 per week or $23,660 per year).170 In general, the regulations (hereinafter "the 2004 Regulations") increased the required salary thresholds for exempt employees and modified the "duties tests" for executive, professional, administrative, computer and outside sales employees. One of the major modifications of the 2004 Regulations was to eliminate the "long test" and "short test" formerly used to determine exempt status of white collar employees. The tests have now been replaced by specific salary "floors" that must be met for an employee to qualify as exempt from the overtime requirements of the FLSA. Thus, for the executive, administrative and professional exemptions to apply, an employee must be paid a minimum of $455 per week ($23,660 per year). To qualify under the computer professional exemption, an employee must be paid a minimum of $455 per week or $27.65 per hour.171 Additionally, the 2004 Regulations create an exemption for any employee who receives at least $100,000 per year in salary, bonus and commission and performs at least one of the duties required for an exempt executive, administrative or professional employee.172
On March 13, 2014, President Obama directed the DOL to update the regulations defining which white collar workers are protected by the FLSA's minimum wage and overtime standards. On July 6, 2015, the DOL issued a Notice of Proposed Rulemaking and invited public comments regarding the proposed changes to the 2004 regulations.173
On May 23, 2016, the DOL issued a Final Rule updating the regulations regarding the standard salary level and annual compensation requirements for the white collar exemptions.174 The standard salary level was established using data published by the Bureau of Labor Statistics regarding the 40th percentile of weekly earnings of full-time nonhourly workers in the lowest-wage Census Region.175
If implemented, the DOL set the standard salary level at $913 per week, or $47,476 annually, exclusive of board, lodging or other facilities.176 The new proposed standard salary level applies to...
