The Administrative Exemption under the Fair Labor Standards Act (FLSA)

An employee who is employed in a “bona fide administrative 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 administrative exemption, an employee must meet the following requirements:

  • The employee must be compensated on a salary basis or a fee basis at a rate of not less than $455 per week;
  • The employee’s primary duty must be 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
  • The employee’s primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.

See 29 C.F.R. § 541.200.

Minnesota law has a similar exemption from its minimum wage and overtime requirements for administrative employees.  See Minn. Stat. § 177.23, Subd. 7(6).  To qualify for the administrative 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 or fee;
  • Either perform office or nonmanual work directly related to management policies or general business operations, or perform functions in the administration of a school system or subdivision thereof, in work directly relating to academic instruction; and
  • Regularly exercise discretion or independent judgment.

Under the second test, the employee must:

  • Receive at least $155 per week in salary or fee;
  • Either perform office or nonmanual work directly related to business operations or management policies, or administer an educational system or subdivision thereof in work relating to academic instruction;
  • Regularly exercise discretion and independent judgment and make important decisions;
  • Devote less than 20 percent of time worked, or 40 percent in retail or service establishments, to nonexempt work; and
  • Either: (i) directly assist an owner or bona fide executive or administrative employee; (ii) perform supervised work only along lines requiring special training or experience; or (iii) execute special assignments.

See Minn. R. § 5200.0200.

About Michael Miller

Michael is a Chambers-rated attorney in Briggs and Morgan's Employment, Benefits, and Labor group and is head of the firm’s Employment Law Counseling and Compliance practice group. He has 25 years experience counseling employers to prevent unwanted litigation and advises companies of ongoing changes in federal, state and local employment law. Michael advises employers in all areas of employment law including discipline and discharge, leaves of absence, wage and hour compliance, non-compete and confidentiality agreements, affirmative action plans, background checking, and drug/alcohol testing. For Michael's full bio, click here.

Posted on December 29, 2011, in Wage and Hour and tagged . Bookmark the permalink. Leave a comment.

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