The Department of Labor is currently preparing revisions to the Fair Labor Standards Act (FLSA), which will be issued in the next coming months. Most observers believe that these revisions will include adjustment to the “salary basis” test. Currently, if employees make more than $455 and fall into certain “white-collar” categories, employers may classify such workers as exempt and not be required to pay overtime. However, because this threshold is so low, often workers deserving of overtime pay fall into the exempt category and are denied the opportunity to earn such compensation.
In addition to meeting the salary requirements, employees may be considered exempt where they perform certain executive, administrative or professional duties.
The executive exemption applies to those workers whose primary duty is the management of the “enterprise” or a subdivision, and who have the authority to “hire, fire, and promote employees or make such personnel recommendations that hold weight with the employer.”
Often business owners, managers and vice presidents fall into this category, but a title alone is not enough to meet the criteria.