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January 31, 2024 Employment Law

A Guide to the Fair Labor Standards Act and Its Exemptions

There are two major employment-related issues that typically are more important than any others for most employees: (1) their wage or salary and (2) their working schedule. Ideally, employees would like to be paid as much as possible to work as little as possible; for employers, the ideal situation would be the inverse. The Fair Labor Standards Act (FLSA) sets the ground rules at the federal level for compensation, work schedules, and other employment practices to ensure that both parties’ interests are protected. While the FLSA applies to almost all employees in the U.S., there are several major exemptions that can lead to disputes between employers and employees. A Richmond employment lawyer can advise both parties of their rights and responsibilities under the FLSA. 

Basics of the FLSA 

The FLSA, enacted in 1938, is one of the oldest and most comprehensive federal employment laws on the books. At a high level, it does four things: 

  1. Establishes the federal minimum wage
  2. Sets the standard 40-hour workweek
  3. Requires employers to provide extra compensation for hours worked in excess of 40
  4. Regulates the employment of minors

The FLSA does not regulate: 

  • Vacation, holiday, severance, sick leave, or parental leave
  • Meals or rest periods
  • Pay raises or benefits
  • Discharge notices

Most states have similar laws covering the same subject matter as the FLSA (such as the Virginia Overtime Wage Act). Many of those laws regulate employment issues not covered under the FLSA. While state-level employment laws may provide greater protection to employees, they may not provide less protection than the federal floor set by the FLSA. 

Employers Covered by the FLSA

A “covered enterprise” under the FLSA is any employer whose annual sales or business done is $500,000 or who is engaged in interstate commerce. The Department of Labor (the federal agency tasked with enforcing the FLSA) and the courts interpret the term “interstate commerce” exceptionally broadly. For example, even phone calls placed to recipients in other states have been deemed to affect interstate commerce. As a result, virtually all employers in the U.S. are considered to be engaged in interstate commerce and, therefore, are covered by the FLSA. 

Employees Who Are Exempt From the FLSA

The vast majority of employees in the U.S. are either “exempt” or “non-exempt” from the FLSA. Generally, non-exempt workers include most workers who are paid hourly. The FLSA requires employers to pay overtime equal to 1.5 times a non-exempt worker’s hourly wage for any hours workers in excess of 40 per work week. Exempt workers include the below categories of employees. Readers should note that whether one or more of the below exemptions applies to a particular employee is not always clear; for more specific information, please speak to a Richmond employment lawyer

Employees of Small Agricultural Operations 

Employees who are engaged in agriculture (as defined by the FLSA) are exempt from its overtime provisions. Agriculture includes “farming in all its branches when performed by a farmer or on a farm as an incident to or in conjunction with such farming operations.” Agricultural employers who used fewer than 500 “man days” are exempt from both the minimum wage and overtime provisions. 

Executive Employees

To qualify for the executive employee exemption, the employee must meet all of the following requirements: 

  • Compensated on a salary basis at a rate of at least $684 per week
  • Primary duties must be the management of the enterprise or a department or subdivision of the enterprise
  • Must regularly manage the work of at least two or more other full-time employees
  • Have the authority to hire and fire other employees 

A Richmond employment lawyer can help determine whether a particular managerial employee counts as an “executive” under the FLSA. 

Learned Professional Employees 

To qualify for the learned professional exemption, the employee must meet all of the following requirements: 

  • Compensated on a salary basis at a rate of at least $684 per week
  • Primary duties must be the performance of work requiring advanced knowledge (i.e., intellectual in character and requiring the exercise of discretion and judgment) 
  • Advanced knowledge in a field of science or learning that has been acquired through prolonged study 

Computer Employees 

A “computer employee” is a skilled employee who is employed as a computer systems analyst, computer programmer, or software engineer and who is engaged in the following duties: 

  • Applying systems analysis techniques and procedures to determine hardware, software, or system functional specifications
  • Designing, developing, documenting, analyzing, creating, testing, or modifying computer systems or programs 
  • Designing, documenting, testing, creating, or modifying computer programs related to machine operating systems
  • A combination of the above duties

To qualify for the computer employee exemption, the employee must also be compensated on a salary basis at a rate of at least $684 per week or, if hourly, at a rate of at least $27.63 per hour. 

Outside Sales Employees

Generally, an outside sales employee is one who makes sales by going out into the field to meet with prospective customers. To qualify for the exemption, the employee must meet both of the following requirements: 

  • Primary duties are making sales or obtaining orders or contracts for services or for the use of facilities for which payment will be made by the customer
  • Must be customarily and regularly engaged away from the employer’s primary place of business 

Highly Compensated Employees 

Highly compensated employees are exempt from the FLSA if they perform office or non-manual work, are paid an annual compensation of at least $107,432, and are customarily and regularly engaged in the duties of an exempt executive, administrative, or professional employee. 

Speak to a Richmond Employment Lawyer About Wage and Hour Issues 

The FLSA is a sprawling and complex federal regulatory scheme that can easily present pitfalls for employers who are unfamiliar with its application. For more information about the FLSA and related wage and hour issues, please contact a Richmond employment lawyer at Pierce / Jewett by calling 804-502-2320 or using our online contact form.