With the publication of a proposed overtime rule expected very soon, employers must be ready for the change, which includes a potential overhaul of their HR policies and procedures.
The duties tests denote which employees are exempt (not eligible for overtime pay) and they depend on a variety of factors. Each of the three white-collar exemptions listed below have a slightly different criteria:
- Executive exemption – The employee’s primary duty must be managing the enterprise or a department or subdivision of the enterprise. The employee must customarily and regularly direct the work of at least two employees and have the authority to hire or fire workers (or the employee’s suggestions and recommendations as to hiring, firing or changing the status of other employees must be given particular weight).
- Administrative exemption – The employee’s primary duty must be performing office or nonmanual work that is directly related to the management or general business operations of the employer or the employer’s customers. The employee’s primary duty also must include the exercise of discretion and independent judgment with respect to matters of significance.
- Professional exemption – The employee’s primary duty must be to perform work requiring advanced knowledge in a field of science or learning that is customarily acquired by prolonged, specialized, intellectual instruction and study.
Under federal law and laws in most states, an employee’s exempt status is determined by the employee’s primary duties and whether those duties are exempt. In addition, employers must be aware of IRS rules regarding exempt and non-exempt.
Stuart J. Oberman, Esq.
Stuart J. Oberman is the founder and President of Oberman Law Firm. Mr. Oberman graduated from Urbana University and received his law degree from John Marshall Law School. Mr. Oberman has been practicing law for over 30 years, and before going into private practice, Mr. Oberman was in-house counsel for a Fortune 500 Company.
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