The Executive Exemption Under the Fair Labor Standards Act (FLSA)
An employee who is employed in a “bona fide executive capacity” is exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA). See 29 U.S.C. § 213(a)(1). To qualify for the FLSA’s executive exemption, an employee must meet the following requirements:
- The employee must be compensated on a salary basis at a rate of not less than $455 per week;
- The employee’s primary duty must be management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;
- The employee must customarily and regularly direct the work of two or more other employees; and
- The employee must have the authority to hire or fire other employees or make suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees that are given particular weight.
See 29 C.F.R. § 541.100.
Minnesota law has a similar exemption from its minimum wage and overtime requirements for executive employees. See Minn. Stat. § 177.23, Subd. 7(6). To qualify for the executive exemption under Minnesota law, an employee must satisfy at least one of two tests. Under the first test, the employee must:
- Receive at least $250 per week in salary;
- Manage the enterprise by which the person is employed or a recognized department or subdivision thereof; and
- Customarily direct the work of two or more other employees.
Under the second test, the employee must:
- Receive at least $155 per week in salary;
- Manage and supervise a department of at least two other full-time people (who each work at least 35 hours in a workweek);
- Have authority to hire or fire or suggest changes in an employee’s status;
- Regularly exercise discretionary powers; and
- Either: (i) devote less than 20 percent of time worked, or 40 percent in retail or service establishments, to nonexempt work; (ii) own 20 percent or more of the business; or (iii) have sole charge of an independent or branch establishment.
See Minn. R. § 5200.0190.