The Fair Labor Standards Act (FLSA) exempts from its minimum wage and overtime standards employees who qualify as executive employees. 29 USC 213(a)(1); 29 CFR 541.100-106 For an employee to qualify for the executive employee exemption, the following criteria must be met:
- Earn not less than an amount established by the US Department of Labor;
- be compensated on a salary basis;
- have the primary duty of managing the employer’s company or enterprise, or managing a “customarily recognized department or subdivision” of the company or enterprise;
- customarily and regularly direct the work of two or more other full-time employees; and
- possess the authority to hire or fire other employees, or the employee’s recommendations as to the hiring, firing, advancement, promotion, or any other change to the status of other employees must be given “particular weight.”
An employee also qualifies for the executive exemption if he or she owns at least a 20 percent equity interest in the company or enterprise by which he or she is employed and is actively engaged in the company or enterprise’s management. The minimum salary requirements do not need to be met for this “business owner” exemption to apply. 29 CFR 541.101
Employees training for executive positions, but who are not actually performing exempt work, are not eligible for exempt status. 29 CFR 541.705.
Related Topics
- Combination Exemptions
- Concurrent Duties
- Customarily and Regularly
- Department or Subdivision
- Directly and Closely Related
- Emergencies
- Fee Basis
- FLSA Exemptions Summary
- Management Duties
- Occasional Nonexempt Tasks
- Particular Weight
- Primary Duty
- Salary Basis
- Trainees
- Two or More Full-Time Employees
