The Fair Labor Standards Act (FLSA) covers most employees and requires that they be paid at least the minimum wage as well as overtime compensation for all hours worked over 40 in a workweek. However, the FLSA exempts certain categories of employees that are paid a salary and can meet certain tests regarding their job duties. Being paid on a “salary basis” means that an employee regularly receives a predetermined amount of compensation each pay period. Typically, an exempt employee must receive the full salary for any week in which the employee performs any work regardless of the number of days or hours worked. Significantly, an employee who receives an hourly rate of pay is automatically non-exempt.

Beyond the question of whether the employee is actually paid salary, an employee’s exempt status usually turns on whether the person’s job duties satisfy the exemption test. Job titles and labels do not matter. For example, a restaurant employee who has the title of manager or supervisor, but primarily performs a non-exempt duty like cooking is likely a non-exempt employee who is eligible to receive overtime compensation.

Misclassification of salaried employees occurs when an employer wrongly classifies an employee as a salaried-exempt employee even when the job duties of that employee dictate that the employee should be considered an hourly, non-exempt employee. Among the most commonly misclassified employees are those wrongly classified as exempt under the “white-collar” exemptions for executive, administrative, and professional employees in Section 13(a)(1) of the FLSA.

The Executive Exemption

• The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
• The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
• The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

The Administrative Exemption

• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate 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 includes the exercise of discretion and independent judgment with respect to matters of significance.

The Professional Exemption

• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
• The advanced knowledge must be in a field of science or learning; and
• The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

Other Exemptions

Outside Sales Exemption

An employee who performs sales work offsite and whose primary duties include making sales or obtaining orders or contracts for services or for the use of facilities for which the client or customer pays. This employee is customarily and regularly away from the company’s place of business while performing such duties. This exemption is not subject to the salaried requirement.

Computer Professional Exemption

An employee who earns $455 or more per week — or, if compensated on an hourly basis, a rate not less than $27.63 an hour — primarily performing work as a computer systems analyst, programmer, software engineer or similarly skilled worker involved in the design or application of computer systems and related systems. This exemption does not include employees engaged in the manufacturing or repair of computers.

In order to be exempt under the FLSA, an employee’s salary and job duties must satisfy all of the exemption’s requirements. Most commonly, misclassified salaried-exempt employees satisfy some — but not all — of the exemption’s requirements. In many cases, while the employee may appear to be exempt based on the worker’s salaried status and job title, a more thorough examination of the employee’s job duties reveals that employee is misclassified as a salaried-exempt employee and is eligible to receive minimum wage and overtime compensation.

If you believe you may have been misclassified as salaried-exempt, call the Nolan Law Office immediately for a free consultation with our Chicago employment attorneys today. You may be entitled to recover unpaid wages such as unpaid minimum wages and overtime compensation, liquidated or “double” damages, interest, and attorneys’ fees.