Massachusetts Employment Law Blog

A common misconception is that paying a salary to an employee makes the employee exempt from the overtime requirements of the Fair Labor Standards Act (FLSA). In reality, many salaried employees do not qualify for any exemption from overtime obligations, and relying solely upon whether employees are paid a salary in classifying them as exempt or nonexempt will almost certainly result in misclassifications. Employees cannot agree or acquiesce to be paid as an exempt employee if they do not otherwise meet the requirements for exemption in the FLSA, so proper classification of employees is important. To be exempt from overtime payments, the employee must be paid on a salary basis (the “salary basis test”) and the employee must meet certain tests regarding their job duties (the “primary duties test”).

Being paid on a salary basis means that the employee is paid a predetermined salary of at least $455 per week. The amount cannot be reduced because of variations in the quality or quantity of the employee’s work. The salary requirement does not apply to outside sales employees, teachers, employees practicing law or medicine and in certain situations where an employee is paid on a fee basis. In addition, exempt computer employees may be paid at least $455 on a salary basis or on an hourly basis at a rate not less than $27.63 an hour.

To pass the primary duties test, the employee’s job duties must meet the requirements of one of the established exemptions. The most common exemptions include:

• The executive exemption, which applies where an employee (1) has as his or her primary duty the management of the enterprise or of a customarily recognized department or subdivision thereof; (2) customarily and regularly supervises two full time employees or their equivalent; and (3) has the ability to hire or fire employees or be able to make recommendations which are given particular weight regarding hiring or firing or material changes in status.
• The administrative exemption, which applies to employees whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and who exercises independent judgment and discretion with respect to matters of significance.
• The professional exemption, which applies to either “learned professionals” who have knowledge of an advanced type in a field of science or learning customarily acquired through a prolonged course of intellectual instruction and study, or “artistic professional employees,” who engage in invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
• The computer employee exemption, which applies to workers whose primary duties include: the application of systems analysis techniques and procedures to determine hardware, software or system functional specifications; the design, development, documentation, analysis, creation, testing or modification of computer systems or programs based on and related to user or system design specifications; and/or the design, documentation, testing, creation or modification of computer programs related to machine operating system.
• The outside sales exemption, which applies to employees who are customarily and regularly engaged away from the employer’s place or places of business, and whose primary duty is making sales, or obtaining orders or contracts for services or for the use of facilities.

For more information, please contact a member of our employment law team.