With only a week until the effective date (long ago scheduled as 12/1), the FLSA Overtime rule has been delayed indefinitely. U.S. District Judge Amos Mazzant ruled the DOL’s plan unlawful yesterday after hearing arguments last week.

Fair Labor Standards Act – Overtime Regulations

Guest author:  Jack Meyers, President, LukeJackson Benefit Solutions

Exempt and Non-Exempt Employees

Although well publicized it is important for employers to revisit the impending changes to the Fair Labor Standards Act.

Of note, the interaction of the salary test and the duties test, as well as the exemption for highly paid employees, under the Department of Labor’s final rule revising the Fair Labor Standards Act overtime regulations, was supposed to take effect December 1, 2016 until an injunction on November 22.  

Under the final rule, the annual salary threshold for exempt positions will jump from $23,660 to $47,476 (or from $455 to $913 per week). There will be no change in the duties test used to determine whether employees earning more than the salary threshold must be classified as nonexempt from overtime, including the tests for meeting the executive, administrative and professional exemptions.

In addition, highly compensated employees (HCEs) who receive total annual compensation of at least $134,004, up from the old threshold of $100,000, are exempt from the FLSA’s overtime requirements if they meet a duties test that has a lower bar than the test required for employees paid the standard salary level.


  1. If an employee earns more than $47,476, is he or she automatically exempt?

No, although this is a common misconception about the overtime rule. Meeting the salary threshold doesn’t automatically make an employee exempt from overtime pay; employees must earn at least the standard salary threshold of $47,476 and fulfill one of the exemptions in the standard duties test.

Earning a certain salary is only one of three requirements that must be met for an employee to be exempt from overtime under the so-called white collar exemptions.  These three requirements are the two prongs of the salary test plus the duties test:

  • Salary basis test. The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.
  • Salary level test. The amount of salary paid must meet a minimum specified amount of $47,476 in 2017.
  • Duties test. The employee’s job duties must primarily involve executive, administrative or professional duties as defined by the regulations.

It is entirely possible that an employee could meet requirements of the salary basis and salary level tests and still fail to qualify as an exempt employee under the FLSA because the employee might not meet the requirements of the duties test.

  1. If they just meet the duties test, can they be classified as exempt?

No; once again, exempt employees must earn above the threshold of $47,474 and meet one of the exemptions in the standard duties test.

  1. Generally, what duties satisfy each of the white-collar exemptions?
  • For the executive exemption, employees must have a primary duty of managing the enterprise or a department or subdivision of the enterprise; must customarily and regularly direct the work of at least two employees; and must have the authority to hire or fire, or their suggestions and recommendations as to the hiring, firing or changing the status of other employees.
  • For the administrative exemption, employees must have a primary duty of performing office or nonmanual work directly related to the management or general business operations of the employer or the employer’s customers, and their primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.
  • For a professional exemption, employees must have a primary duty of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by prolonged, specialized, intellectual instruction and study, or must specialize in a few other similarly, highly specialized fields, such as teaching, computer analytics and engineering.

Example: An employee who holds the position of assistant manager of a large chain store may be one of several assistant managers assigned to various portions of the store. She might direct the day-to-day activities of several employees but may have no discretion as to whether to hire or fire any employees. The same employee may spend more than half of her time stocking shelves, filing orders and [doing] other routine tasks that require little or no discretion and independent judgment. Even if she were to meet the requirements of the salary basis and salary threshold tests, she would not qualify for the executive, administrative or professional exemptions because she would not meet the duties test required for any of the white-collar exemptions.

  1. If you earn enough, you don’t have to satisfy the duties test?

Employees who receive total annual compensation of at least $134,004—referred to as highly compensated employees (HCEs)—are exempt from the FLSA’s overtime requirements if they meet a more “relaxed” duties test than is required for employees paid the standard salary level. Under the relaxed duties test:

  • The employee’s primary duty must be office or nonmanual work.
  • The employee must “customarily and regularly” perform at least one of the bona fide exempt duties of an executive, administrative or professional employee, as described in the regulations. An HCE who performs exempt duties on an isolated or occasional basis will not satisfy these minimal duties requirement.

Non-management production line workers and employees who perform work involving repetitive operations with their hands, physical skill and energy are not exempt under this section, no matter how highly paid.  However, an example of an employee who could qualify for the relaxed HCE duties test might be a well-paid executive assistant to a high-ranking company official. 

  1. What if an employee earns between the standard salary threshold and the HCE salary threshold?

If an employee earns more than the standard salary threshold ($47,474) but less than the HCE salary threshold ($134,004), then even if he or she passes the relaxed duties test for HCEs, you would need to raise his or her compensation to the HCE threshold to retain the exempt status, Labor Department guidance clarified. Alternatively, you could reclassify the employee as nonexempt, which means that they would be entitled to receive overtime pay for all work hours beyond 40 in a workweek.

For further clarification:



LukeJackson Benefit Solutions does not practice law and this is not a legal document. This communication is not intended to be legal advice and should not be construed as legal advice.  If you have any legal questions or concerns, please seek guidance from legal counsel.