What Is the Executive Exemption Under the FLSA?

And How Do You Know if You’re an “Executive”?

Under the Fair Labor Standards Act (FLSA), most US employees must be paid at least a minimum wage and overtime pay for all hours worked beyond 40 in a workweek. However, there are a number of exemptions that leave many employees without FLSA protections. One of those is the “executive exception.”

The executive exception is intended for executives who have a leadership role in companies. However, employers sometimes misclassify employees under the executive exemption when they do not actually meet the requirements.

When that happens, the employee may be able to gain restitution in court—including back overtime pay.

What Qualifies You for the Executive Exemption? 

To qualify for this exception, you must meet all of the following requirements:

• You must earn a salary (not an hourly wage) of at least $684 per week.
• Your primary job duties must involve leading and managing the company or a recognized department or subdivision of that company.
• You must regularly oversee and direct the work of two or more full-time employees or the equivalent.
• You must have the authority to hire and fire other employees—or your opinions with regard to hiring and firing decisions must hold significant weight.

What Does “Management” Mean in This Context?

To qualify for the executive exemption, your job has to meet the description. But some of the requirements for job duties sound rather vague. For instance, what does it mean to “manage the company or a recognized department or subdivision”?

Luckily, the law is fairly clear at defining these things. “Management” can include—but isn’t limited to—duties such as the following:

• Interviewing, hiring and training new employees.
• Making decisions with regard to hours and pay.
• Supervising employees and team members.
• Maintaining sales and production records.
• Appraising employee performance and making decisions with regard to promotion and pay raises, discipline, and other changes in work status.
• Managing grievances and complaints from employees.
• Planning new projects and initiatives; determining techniques, materials, machinery and supplies to be used; and assigning tasks to team members.
• Overseeing the safety and security of teams and property.
• Planning and controlling budgets.
• Managing legal compliance.

What Does “Two or More Other Employees or Their Equivalent” Mean? 

One of the requirements for being classified under the executive exemption involves regularly overseeing two or more full-time employees or their equivalents.

The wording can be a little confusing. What it means is that the work has to be at minimum the work of two full-time employees. So one full-time employee and two part-time employees would equal two full-time employees for the purposes of this exemption.

What Happens if You Are Misclassified? 

If you are misclassified under the executive exemption, you may be entitled to back overtime pay or other compensation. You should contact a knowledgeable employment lawyer if you believe this is the case.

We’ve helped hundreds of people in this situation gain restitution from their employers. Call us at 267-273-1054 or email us at murphy@phillyemploymentlawyer.com for a free, confidential consultation today.

The information provided here does not constitute legal advice. It is intended for general purposes only. If you have questions about a specific legal issue, you should speak to an attorney.