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FLSA or the Fair Labor Standards Act lays down the provisions for overtime payment to employees. As per the act certain job categories are completely exempted from being eligible for overtime payments. Besides Executive and Professional job categories, even administrative jobs can qualify for FLSA exemption.
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Basic Eligibility for FLSA Administrative Exemption
As with most other FLSA exemptions, the basic qualifying factors for administrative exemption remain the same:
- The employee receives a salary and is not paid on an hourly basis, and that the employee receives nothing less than $455 per week as work compensation.
- The employee works in a company that employs more than 20 people.
- The employee’s routine job calls for exercising some degree of discretion and making decisions.
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FLSA Administrative Exemption Based on the Type of Work Performed
Intended for high level employees, the FLSA administrative exemption essentially covers those employees whose job is not related directly with the production of the products or services that the business sells. Administrative exempt employees are more involved with keeping the business running, by supporting the production or operations activities from outside.
To be eligible for administrative exemption, as per FLSA, an employee’s job should be an office job rather than manual job and the employee should not be working directly in the production or operations departments. The second qualifying criterion is that the employee’s job is related to management or general business operations of the company and that the employee has some decision making authority.
In management, the workforce is often distinguished into two categories – line and staff. Line employees are responsible for the production or basic operations of the business, while the staff employees perform other management and administrative duties. It is the latter job category that qualifies for administrative exemption.
Some of the job areas that qualify for FLSA administrative exemption are:
Human Resource: recruitment, attendance and payroll management, labor relations, personnel management, training and development.
Finance and Legal: Accounting, tax planning, budgeting, regulatory compliance, financial planning, ensuring statutory compliances.
Marketing: product promotion, marketing, advertising, public relations, building sales channels.
These are some of the more prominent job categories that qualify for administrative exemptions, and there may be many more jobs that may qualify as exempt. To determine their exemption status, the jobs need to be examined using the simple checklist that follows.
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How to Determine Eligibility for Administrative Exemption
Whether or not an employee qualifies for administrative exemption will become clear after answering a few questions that are enlisted here. These questions can serve as a checklist to determine the administrative exemption status of an employee.
- Does the employee receive a fixed salary that is more than $455/week?
- Does the employee perform a non-manual office job involving general business administration or management?
- Is the employee required to use his discretion or make decisions in the normal course of his job duties?
- Does the employee participate in either making of the business policies or in interpreting and implementing them?
- Does the employee perform some substantial managerial or administrative tasks?
If the answers to these questions are positive, the employee is eligible for FLSA administrative exemption.