In a previous post, we discussed the new overtime rules that will become effective on December 1st, 2016. As mentioned, there were exemptions to the rules, in which certain professions or positions aren’t covered under the new overtime rules. In matter of fact, the new rules specifically states that the “Duties Test” mentioned in the original Fair Labor Standards Act (FLSA) are to be administered to determine if an employee is exempt from the new overtime rules.
So, what exactly is the “Duties Test” and how can one determine if an employee is exempt from the overtime rules. There are a few things that must be ruled out before determining if a certain position would be exempt. The first qualification would be the salary level. If an employee makes less than $455 per week ($913 after December 1st 2016), then they would be subject to the overtime rules. The second qualification would be whether an employee is in a position to make decisions on their own, without too much scrutiny over the tasks they need to complete. Employees who are management, like a foreman, or a supervisor wouldn’t necessarily qualify, because they don’t have a significant say over the direction of the jobs to be done, only that they are enforcing or leading the task. The types of jobs laid out in the FLSA go into three categories. Executive, professional, and administrative. It must be noted that just because an employee has one of these titles, it doesn’t mean that they would be exempt from the rules. They actually have to have the job of one of those three roles. The determining factor in each of these rules are as follows:
- Executives are upper management employees who oversee the “big picture” parts of a business. These executives must oversee at least two full-time employees, and direct the general direction of the business operations
- Professionals are workers who possess specialized knowledge in their respective areas of expertise. These usually apply to those with advanced degrees like Doctors, nurses, lawyers, accountants, and the like. They also apply in certain cases to computer sciences in software and coding, but they all depend on what kind of work is being done and their pay structure.
- Administrative roles are exempt only if they are high ranking employees working in white-collar jobs who are tasked with carrying out the general direction of the company.
Although these rules won’t specifically be mentioned on labor law posters, they are an integral part of the way a business operates. Business owners and human resource managers will need to apply the “duties test” when determining whether an overtime working employee meets the criteria of an exempt or nonexempt worker.