In addition to New York and New Jersey laws, the federal Fair Labor Standards Act governs workers’ wages and compensation. Employers must pay most employees a minimum wage and time-and-a-half for overtime. Managers and administrators, however, may be exempt from these requirements.
White collar exemption
The FLSA Law contains a white-collar exemption from minimum wage and overtime requirements for certain executive, administrative, professional, computer and outside sales workers.
To fall within these exemptions, employees must receive a predetermined salary that cannot be reduced based on the number of hours worked or that work’s quality. Their salary must also meet the required FLSA threshold which is currently $684 per week or $35,568 yearly. Employees have to meet a FLSA duties’ test.
Duties
To fall within the executive exemption for most managers and supervisors, an employee’s primary duty should be managing the enterprise or one of its recognized subdivisions or departments. They must regularly direct the work of at least two subordinate employees.
The administrative exemption can apply to employees whose primary duties are office or non-manual work related to management or general business operations. They must have authority to exercise discretion and independent judgment on significant matters. Examples include office managers, financial consultants and inspectors.
FLSA also contains a learned professional and creative professional exemption. A learned professional’s primary duty requires advanced knowledge in a specialized science or learning such as a college degree. Examples include engineers, pharmacists, and accountants. Examples of creative professionals include editorial writers, graphic artists and actors.
The computer employee exemption requires theoretical and practical knowledge in computer systems analysis, programming, or software engineering. Their duties include designing, testing, or implementing software or hardware systems. A minimum salary of $684 per week is required if it is paid on a salary basis but FLSA also allows payment of a $27.63 hourly rate.
The outside sales exemption also requires a duties test. But it also has a location test and no minimum salary. An employee’s primary duty must be engaging in sales away from their employer’s places of business.
Salary threshold
The most recent increase to the salary exemption occurred on Jan. 1, 2020, when it was raised from $455.00 per week or $23,660 annually to $684 per week or $35,568 annually.
The federal government proposed a raise from $55.00 per week to $913 per week, $47,476 annually, in 2016. But it was blocked in court and ultimately withdrawn.
Recently, the government announced that it intends to issue a proposed increase in the salary threshold this year. It is believed it may be $1,300 per week.
Attorneys can help assure legal compliance. They can also protect interests in wage lawsuits and investigations.