Excerpt from Federal Register, Volume 69, Number 79
[[Page 22260]]Dun & Bradstreet (D&B, 2001b), Industry Norms and Key Business Ratios for Fiscal Year 2000/2001.
Dun & Bradstreet (D&B, 2002), Industry Norms and Key Business
Ratios for Fiscal Year 2001/2002.
Bell and Hart; Unpaid Work''; Economica, 66: 271-290, 1999
Bell, Hart, Hubler, and Schwerdt,Paid and Unpaid Overtime
Working in Germany and the UK,” IZA Discussion Paper Number 133,
Bonn, Germany: The Institute for the Study of Labor, March 2000,
Lena M. Bottos and Christopher J. Fusco; “Competitive Pay
Policy’; SPHR 2002; Salary.com, Inc.
List of Subjects in 29 CFR Part 541
Labor, Minimum wages, Overtime pay, Salaries, Teachers, Wages.
Signed at Washington, DC, this 16th day of April 2004.Victoria A. Lipnic,
Assistant Secretary for Employment Standards.
Tammy D. McCutchen,
Administrator, Wage and Hour Division.
0
For the reasons set forth above, 29 CFR part 541 is revised to read as
follows:
PART 541–DEFINING AND DELIMITING THE EXEMPTIONS FOR EXECUTIVE,
ADMINISTRATIVE, PROFESSIONAL, COMPUTER AND OUTSIDE SALES EMPLOYEES
Subpart A–General Regulations
Sec.
541.0 Introductory statement.
541.1 Terms used in regulations.
541.2 Job titles insufficient.
541.3 Scope of the section 13(a)(1) exemptions.
541.4 Other laws and collective bargaining agreements.
Subpart B–Executive Employees
541.100 General rule for executive employees.
541.101 Business owner.
541.102 Management.
541.103 Department or subdivision.
541.104 Two or more other employees.
541.105 Particular weight.
541.106 Concurrent duties.
Subpart C–Administrative Employees
541.200 General rule for administrative employees.
541.201 Directly related to management or general business
operations.
541.202 Discretion and independent judgment.
541.203 Administrative exemption examples.
541.204 Educational establishments.
Subpart D–Professional Employees
541.300 General rule for professional employees.
541.301 Learned professionals.
541.302 Creative professionals.
541.303 Teachers.
541.304 Practice of law or medicine.
Subpart E–Computer Employees
541.400 General rule for computer employees.
541.401 Computer manufacture and repair.
541.402 Executive and administrative computer employees.
Subpart F–Outside Sales Employees
541.500 General rule for outside sales employees.
541.501 Making sales or obtaining orders.
541.502 Away from employer’s place of business.
541.503 Promotion work.
541.504 Drivers who sell.
Subpart G–Salary Requirements
541.600 Amount of salary required.
541.601 Highly compensated employees.
541.602 Salary basis.
541.603 Effect of improper deductions from salary.
541.604 Minimum guarantee plus extras.
541.605 Fee basis.
541.606 Board, lodging or other facilities.
Subpart H–Definitions And Miscellaneous Provisions
541.700 Primary duty.
541.701 Customarily and regularly.
541.702 Exempt and nonexempt work.
541.703 Directly and closely related.
541.704 Use of manuals.
541.705 Trainees.
541.706 Emergencies.
541.707 Occasional tasks.
541.708 Combination exemptions.
541.709 Motion picture producing industry.
541.710 Employees of public agencies.
Authority: 29 U.S.C. 213; Public Law 101-583, 104 Stat. 2871; Reorganization Plan No. 6 of 1950 (3 CFR 1945-53 Comp. p. 1004);
Secretary’s Order No. 4-2001 (66 FR 29656).
Subpart A–General Regulations
Sec. 541.0 Introductory statement.
(a) Section 13(a)(1) of the Fair Labor Standards Act, as amended, provides an exemption from the Act’s minimum wage and overtime
requirements for any employee employed in a bona fide executive,
administrative, or professional capacity (including any employee
employed in the capacity of academic administrative personnel or
teacher in elementary or secondary schools), or in the capacity of an
outside sales employee, as such terms are defined and delimited from
time to time by regulations of the Secretary, subject to the provisions
of the Administrative Procedure Act. Section 13(a)(17) of the Act
provides an exemption from the minimum wage and overtime requirements
for computer systems analysts, computer programmers, software
engineers, and other similarly skilled computer employees.
(b) The requirements for these exemptions are contained in this
part as follows: executive employees, subpart B; administrative
employees, subpart C; professional employees, subpart D; computer
employees, subpart E; outside sales employees, subpart F. Subpart G
contains regulations regarding salary requirements applicable to most
of the exemptions, including salary levels and the salary basis test.
Subpart G also contains a provision for exempting certain highly
compensated employees. Subpart H contains definitions and other
miscellaneous provisions applicable to all or several of the
exemptions.
(c) Effective July 1, 1972, the Fair Labor Standards Act was
amended to include within the protection of the equal pay provisions
those employees exempt from the minimum wage and overtime pay
provisions as bona fide executive, administrative, and professional
employees (including any employee employed in the capacity of academic
administrative personnel or teacher in elementary or secondary
schools), or in the capacity of an outside sales employee under section
13(a)(1) of the Act. The equal pay provisions in section 6(d) of the
Fair Labor Standards Act are administered and enforced by the United
States Equal Employment Opportunity Commission.
Sec. 541.1 Terms used in regulations.
Act means the Fair Labor Standards Act of 1938, as amended.
Administrator means the Administrator of the Wage and Hour Division, United States Department of Labor. The Secretary of Labor has
delegated to the Administrator the functions vested in the Secretary
under sections 13(a)(1) and 13(a)(17) of the Fair Labor Standards Act.
Sec. 541.2 Job titles insufficient.
A job title alone is insufficient to establish the exempt status of an employee. The exempt or nonexempt status of any particular employee
must be determined on the basis of whether the employee’s salary and
duties meet the requirements of the regulations in this part.
Sec. 541.3 Scope of the section 13(a)(1) exemptions.
(a) The section 13(a)(1) exemptions and the regulations in this part do not apply to manual laborers or other blue collar'' workers
who perform work involving repetitive operations with their hands,
physical skill and energy. Such nonexemptblue collar” employees
gain the skills and knowledge required for performance of their routine
manual and physical work through apprenticeships and on-the-job
training, not through the prolonged
course of specialized intellectual instruction required for exempt
learned professional employees such as medical doctors, architects and
archeologists. Thus, for example, non-management production-line
employees and non-management employees in maintenance, construction and
similar occupations such as carpenters, electricians, mechanics,
plumbers, iron workers, craftsmen, operating engineers, longshoremen,
construction workers and laborers are entitled to minimum wage and
overtime premium pay under the Fair Labor Standards Act, and are not
exempt under the regulations in this part no matter how highly paid
they might be.
(b)(1) The section 13(a)(1) exemptions and the regulations in this
part also do not apply to police officers, detectives, deputy sheriffs,
state troopers, highway patrol officers, investigators, inspectors,
correctional officers, parole or probation officers, park rangers, fire
fighters, paramedics, emergency medical technicians, ambulance
personnel, rescue workers, hazardous materials workers and similar
employees, regardless of rank or pay level, who perform work such as
preventing, controlling or extinguishing fires of any type; rescuing
fire, crime or accident victims; preventing or detecting crimes;
conducting investigations or inspections for violations of law;
performing surveillance; pursuing, restraining and apprehending
suspects; detaining or supervising suspected and convicted criminals,
including those on probation or parole; interviewing witnesses;
interrogating and fingerprinting suspects; preparing investigative
reports; or other similar work.
(2) Such employees do not qualify as exempt executive employees
because their primary duty is not management of the enterprise in which
the employee is employed or a customarily recognized department or
subdivision thereof as required under Sec. 541.100. Thus, for example,
a police officer or fire fighter whose primary duty is to investigate
crimes or fight fires is not exempt under section 13(a)(1) of the Act
merely because the police officer or fire fighter also directs the work
of other employees in the conduct of an investigation or fighting a
fire.
(3) Such employees do not qualify as exempt administrative
employees because their primary duty is not the performance of work
directly related to the management or general business operations of
the employer or the employer’s customers as required under Sec.
541.200.
(4) Such employees do not qualify as exempt professionals because
their primary duty is not the performance of work requiring knowledge
of an advanced type in a field of science or learning customarily
acquired by a prolonged course of specialized intellectual instruction
or the performance of work requiring invention, imagination,
originality or talent in a recognized field of artistic or creative
endeavor as required under Sec. 541.300. Although some police
officers, fire fighters, paramedics, emergency medical technicians and
similar employees have college degrees, a specialized academic degree
is not a standard prerequisite for employment in such occupations.
Sec. 541.4 Other laws and collective bargaining agreements.
The Fair Labor Standards Act provides minimum standards that may be exceeded, but cannot be waived or reduced. Employers must comply, for
example, with any Federal, State or municipal laws, regulations or
ordinances establishing a higher minimum wage or lower maximum workweek
than those established under the Act. Similarly, employers, on their
own initiative or under a collective bargaining agreement with a labor
union, are not precluded by the Act from providing a wage higher than
the statutory minimum, a shorter workweek than the statutory maximum,
or a higher overtime premium (double time, for example) than provided
by the Act. While collective bargaining agreements cannot waive or
reduce the Act’s protections, nothing in the Act or the regulations in
this part relieves employers from their contractual obligations under
collective bargaining agreements.
Subpart B–Executive Employees
Sec. 541.100 General rule for executive employees.
(a) The term ``employee employed in a bona fide executive capacity” in section 13(a)(1) of the Act shall mean any employee:
(1) Compensated on a salary basis at a rate of not less than $455
per week (or $380 per week, if employed in American Samoa by employers
other than the Federal Government), exclusive of board, lodging or
other facilities;
(2) Whose primary duty is management of the enterprise in which the
employee is employed or of a customarily recognized department or
subdivision thereof;
(3) Who customarily and regularly directs the work of two or more
other employees; and
(4) Who has the authority to hire or fire other employees or whose
suggestions and recommendations as to the hiring, firing, advancement,
promotion or any other change of status of other employees are given
particular weight.
(b) The phrase salary basis'' is defined at Sec. 541.602;
board, lodging or other facilities” is defined at Sec. 541.606;
primary duty'' is defined at Sec. 541.700; andcustomarily and
regularly” is defined at Sec. 541.701.
Sec. 541.101 Business owner.
The term ``employee employed in a bona fide executive capacity'' in section 13(a)(1) of the Act also includes any employee who owns at
least a bona fide 20-percent equity interest in the enterprise in which
the employee is employed, regardless of whether the business is a
corporate or other type of organization, and who is actively engaged in
its management. The term “management” is defined in Sec. 541.102.
The requirements of Subpart G (salary requirements) of this part do not
apply to the business owners described in this section.
Sec. 541.102 Management.
Generally, ``management'' includes, but is not limited to, activities such as interviewing, selecting, and training of employees;
setting and adjusting their rates of pay and hours of work; directing
the work of employees; maintaining production or sales records for use
in supervision or control; appraising employees’ productivity and
efficiency for the purpose of recommending promotions or other changes
in status; handling employee complaints and grievances; disciplining
employees; planning the work; determining the techniques to be used;
apportioning the work among the employees; determining the type of
materials, supplies, machinery, equipment or tools to be used or
merchandise to be bought, stocked and sold; controlling the flow and
distribution of materials or merchandise and supplies; providing for
the safety and security of the employees or the property; planning and
controlling the budget; and monitoring or implementing legal compliance
measures.
Sec. 541.103 Department or subdivision.
(a) The phrase ``a customarily recognized department or subdivision” is intended to distinguish between a mere collection of
employees assigned from time to time to a specific job or series of
jobs and a unit with permanent status and function. A customarily
recognized department or subdivision must have a permanent status and a
continuing function. For example, a
large employer’s human resources department might have subdivisions for
labor relations, pensions and other benefits, equal employment
opportunity, and personnel management, each of which has a permanent
status and function.
(b) When an enterprise has more than one establishment, the
employee in charge of each establishment may be considered in charge of
a recognized subdivision of the enterprise.
(c) A recognized department or subdivision need not be physically
within the employer’s establishment and may move from place to place.
The mere fact that the employee works in more than one location does
not invalidate the exemption if other factors show that the employee is
actually in charge of a recognized unit with a continuing function in
the organization.
(d) Continuity of the same subordinate personnel is not essential
to the existence of a recognized unit with a continuing function. An
otherwise exempt employee will not lose the exemption merely because
the employee draws and supervises workers from a pool or supervises a
team of workers drawn from other recognized units, if other factors are
present that indicate that the employee is in charge of a recognized
unit with a continuing function.
Sec. 541.104 Two or more other employees.
(a) To qualify as an exempt executive under Sec. 541.100, the employee must customarily and regularly direct the work of two or more
other employees. The phrase “two or more other employees” means two
full-time employees or their equivalent. One full-time and two half-
time employees, for example, are equivalent to two full-time employees.
Four half-time employees are also equivalent.
(b) The supervision can be distributed among two, three or more
employees, but each such employee must customarily and regularly direct
the work of two or more other full-time employees or the equivalent.
Thus, for example, a department with five full-time nonexempt workers
may have up to two exempt supervisors if each such supervisor
customarily and regularly directs the work of two of those workers.
(c) An employee who merely assists the manager of a particular
department and supervises two or more employees only in the actual
manager’s absence does not meet this requirement.
(d) Hours worked by an employee cannot be credited more than once
for different executives. Thus, a shared responsibility for the
supervision of the same two employees in the same department does not
satisfy this requirement. However, a full-time employee who works four
hours for one supervisor and four hours for a different supervisor, for
example, can be credited as a half-time employee for both supervisors.
Sec. 541.105 Particular weight.
To determine whether an employee's suggestions and recommendations are given particular weight,'' factors to be considered include, but
are not limited to, whether it is part of the employee's job duties to
make such suggestions and recommendations; the frequency with which
such suggestions and recommendations are made or requested; and the
frequency with which the employee's suggestions and recommendations are
relied upon. Generally, an executive's suggestions and recommendations
must pertain to employees whom the executive customarily and regularly
directs. It does not include an occasional suggestion with regard to
the change in status of a co-worker. An employee's suggestions and
recommendations may still be deemed to haveparticular weight” even
if a higher level manager’s recommendation has more importance and even
if the employee does not have authority to make the ultimate decision
as to the employee’s change in status.
Sec. 541.106 Concurrent duties.
(a) Concurrent performance of exempt and nonexempt work does not disqualify an employee from the executive exemption if the requirements
of Sec. 541.100 are otherwise met. Whether an employee meets the
requirements of Sec. 541.100 when the employee performs concurrent
duties is determined on a case-by-case basis and based on the factors
set forth in Sec. 541.700. Generally, exempt executives make the
decision regarding when to perform nonexempt duties and remain
responsible for the success or failure of business operations under
their management while performing the nonexempt work. In contrast, the
nonexempt employee generally is directed by a supervisor to perform the
exempt work or performs the exempt work for defined time periods. An
employee whose primary duty is ordinary production work or routine,
recurrent or repetitive tasks cannot qualify for exemption as an
executive.
(b) For example, an assistant manager in a retail establishment may
perform work such as serving customers, cooking food, stocking shelves
and cleaning the establishment, but performance of such nonexempt work
does not preclude the exemption if the assistant manager’s primary duty
is management. An assistant manager can supervise employees and serve
customers at the same time without losing the exemption. An exempt
employee can also simultaneously direct the work of other employees and
stock shelves.
(c) In contrast, a relief supervisor or working supervisor whose
primary duty is performing nonexempt work on the production line in a
manufacturing plant does not become exempt merely because the nonexempt
production line employee occasionally has some responsibility for
directing the work of other nonexempt production line employees when,
for example, the exempt supervisor is unavailable. Similarly, an
employee whose primary duty is to work as an electrician is not an
exempt executive even if the employee also directs the work of other
employees on the job site, orders parts and materials for the job, and
handles requests from the prime contractor.
Subpart C–Administrative Employees
Sec. 541.200 General rule for administrative employees.
(a) The term ``employee employed in a bona fide administrative capacity” in section 13(a)(1) of the Act shall mean any employee:
(1) Compensated on a salary or fee basis at a rate of not less than
$455 per week (or $380 per week, if employed in American Samoa by
employers other than the Federal Government), exclusive of board,
lodging or other facilities;
(2) Whose primary duty is 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
(3) Whose primary duty includes the exercise of discretion and
independent judgment with respect to matters of significance.
(b) The term salary basis'' is defined at Sec. 541.602;fee
basis” is defined at Sec. 541.605; board, lodging or other
facilities'' is defined at Sec. 541.606; andprimary duty” is
defined at Sec. 541.700.
Sec. 541.201 Directly related to management or general business
operations.
(a) To qualify for the administrative exemption, an employee's primary duty must be the performance of work directly related to the
management or general business operations of the employer or the
employer’s customers. The phrase “directly related to the management
or general business operations” refers to the type of work
performed by the employee. To meet this requirement, an employee must
perform work directly related to assisting with the running or
servicing of the business, as distinguished, for example, from working
on a manufacturing production line or selling a product in a retail or
service establishment.
(b) Work directly related to management or general business
operations includes, but is not limited to, work in functional areas
such as tax; finance; accounting; budgeting; auditing; insurance;
quality control; purchasing; procurement; advertising; marketing;
research; safety and health; personnel management; human resources;
employee benefits; labor relations; public relations, government
relations; computer network, internet and database administration;
legal and regulatory compliance; and similar activities. Some of these
activities may be performed by employees who also would qualify for
another exemption.
(c) An employee may qualify for the administrative exemption if the
employee’s primary duty is the performance of work directly related to
the management or general business operations of the employer’s
customers. Thus, for example, employees acting as advisers or
consultants to their employer’s clients or customers (as tax experts or
financial consultants, for example) may be exempt.
Sec. 541.202 Discretion and independent judgment.
(a) To qualify for the administrative exemption, an employee's primary duty must include the exercise of discretion and independent
judgment with respect to matters of significance. In general, the
exercise of discretion and independent judgment involves the comparison
and the evaluation of possible courses of conduct, and acting or making
a decision after the various possibilities have been considered. The
term matters of significance'' refers to the level of importance or
consequence of the work performed.
(b) The phrasediscretion and independent judgment” must be
applied in the light of all the facts involved in the particular
employment situation in which the question arises. Factors to consider
when determining whether an employee exercises discretion and
independent judgment with respect to matters of significance include,
but are not limited to: whether the employee has authority to
formulate, affect, interpret, or implement management policies or
operating practices; whether the employee carries out major assignments
in conducting the operations of the business; whether the employee
performs work that affects business operations to a substantial degree,
even if the employee’s assignments are related to operation of a
particular segment of the business; whether the employee has authority
to commit the employer in matters that have significant financial
impact; whether the employee has authority to waive or deviate from
established policies and procedures without prior approval; whether the
employee has authority to negotiate and bind the company on significant
matters; whether the employee provides consultation or expert advice to
management; whether the employee is involved in planning long- or
short-term business objectives; whether the employee investigates and
resolves matters of significance on behalf of management; and whether
the employee represents the company in handling complaints, arbitrating
disputes or resolving grievances.
(c) The exercise of discretion and independent judgment implies
that the employee has authority to make an independent choice, free
from immediate direction or supervision. However, employees can
exercise discretion and independent judgment even if their decisions or
recommendations are reviewed at a higher level. Thus, the term
discretion and independent judgment'' does not require that the
decisions made by an employee have a finality that goes with unlimited
authority and a complete absence of review. The decisions made as a
result of the exercise of discretion and independent judgment may
consist of recommendations for action rather than the actual taking of
action. The fact that an employee's decision may be subject to review
and that upon occasion the decisions are revised or reversed after
review does not mean that the employee is not exercising discretion and
independent judgment. For example, the policies formulated by the
credit manager of a large corporation may be subject to review by
higher company officials who may approve or disapprove these policies.
The management consultant who has made a study of the operations of a
business and who has drawn a proposed change in organization may have
the plan reviewed or revised by superiors before it is submitted to the
client.
(d) An employer's volume of business may make it necessary to
employ a number of employees to perform the same or similar work. The
fact that many employees perform identical work or work of the same
relative importance does not mean that the work of each such employee
does not involve the exercise of discretion and independent judgment
with respect to matters of significance.
(e) The exercise of discretion and independent judgment must be
more than the use of skill in applying well-established techniques,
procedures or specific standards described in manuals or other sources.
See also Sec. 541.704 regarding use of manuals. The exercise of
discretion and independent judgment also does not include clerical or
secretarial work, recording or tabulating data, or performing other
mechanical, repetitive, recurrent or routine work. An employee who
simply tabulates data is not exempt, even if labeled as a
statistician.”
(f) An employee does not exercise discretion and independent
judgment with respect to matters of significance merely because the
employer will experience financial losses if the employee fails to
perform the job properly. For example, a messenger who is entrusted
with carrying large sums of money does not exercise discretion and
independent judgment with respect to matters of significance even
though serious consequences may flow from the employee’s neglect.
Similarly, an employee who operates very expensive equipment does not
exercise discretion and independent judgment with respect to matters of
significance merely because improper performance of the employee’s
duties may cause serious financial loss to the employer.
Sec. 541.203 Administrative exemption examples.
(a) Insurance claims adjusters generally meet the duties requirements for the administrative exemption, whether they work for an
insurance company or other type of company, if their duties include
activities such as interviewing insureds, witnesses and physicians;
inspecting property damage; reviewing factual information to prepare
damage estimates; evaluating and making recommendations regarding
coverage of claims; determining liability and total value of a claim;
negotiating settlements; and making recommendations regarding
litigation.
(b) Employees in the financial services industry generally meet the
duties requirements for the administrative exemption if their duties
include work such as collecting and analyzing information regarding the
customer’s income, assets, investments or debts; determining which
financial products best meet the customer’s needs and financial
circumstances; advising the customer regarding the advantages and
disadvantages of different financial
products; and marketing, servicing or promoting the employer’s
financial products. However, an employee whose primary duty is selling
financial products does not qualify for the administrative exemption.
(c) An employee who leads a team of other employees assigned to
complete major projects for the employer (such as purchasing, selling
or closing all or part of the business, negotiating a real estate
transaction or a collective bargaining agreement, or designing and
implementing productivity improvements) generally meets the duties
requirements for the administrative exemption, even if the employee
does not have direct supervisory responsibility over the other
employees on the team.
(d) An executive assistant or administrative assistant to a
business owner or senior executive of a large business generally meets
the duties requirements for the administrative exemption if such
employee, without specific instructions or prescribed procedures, has
been delegated authority regarding matters of significance.
(e) Human resources managers who formulate, interpret or implement
employment policies and management consultants who study the operations
of a business and propose changes in organization generally meet the
duties requirements for the administrative exemption. However,
personnel clerks who “screen” applicants to obtain data regarding
their minimum qualifications and fitness for employment generally do
not meet the duties requirements for the administrative exemption. Such
personnel clerks typically will reject all applicants who do not meet
minimum standards for the particular job or for employment by the
company. The minimum standards are usually set by the exempt human
resources manager or other company officials, and the decision to hire
from the group of qualified applicants who do meet the minimum
standards is similarly made by the exempt human resources manager or
other company officials. Thus, when the interviewing and screening
functions are performed by the human resources manager or personnel
manager who makes the hiring decision or makes recommendations for
hiring from the pool of qualified applicants, such duties constitute
exempt work, even though routine, because this work is directly and
closely related to the employee’s exempt functions.
(f) Purchasing agents with authority to bind the company on
significant purchases generally meet the duties requirements for the
administrative exemption even if they must consult with top management
officials when making a purchase commitment for raw materials in excess
of the contemplated plant needs.
(g) Ordinary inspection work generally does not meet the duties
requirements for the administrative exemption. Inspectors normally
perform specialized work along standardized lines involving well-
established techniques and procedures which may have been catalogued
and described in manuals or other sources. Such inspectors rely on
techniques and skills acquired by special training or experience. They
have some leeway in the performance of their work but only within
closely prescribed limits.
(h) Employees usually called examiners or graders, such as
employees that grade lumber, generally do not meet the duties
requirements for the administrative exemption. Such employees usually
perform work involving the comparison of products with established
standards which are frequently catalogued. Often, after continued
reference to the written standards, or through experience, the employee
acquires sufficient knowledge so that reference to written standards is
unnecessary. The substitution of the employee’s memory for a manual of
standards does not convert the character of the work performed to
exempt work requiring the exercise of discretion and independent
judgment.
(i) Comparison shopping performed by an employee of a retail store
who merely reports to the buyer the prices at a competitor’s store does
not qualify for the administrative exemption. However, the buyer who
evaluates such reports on competitor prices to set the employer’s
prices generally meets the duties requirements for the administrative
exemption.
(j) Public sector inspectors or investigators of various types,
such as fire prevention or safety, building or construction, health or
sanitation, environmental or soils specialists and similar employees,
generally do not meet the duties requirements for the administrative
exemption because their work typically does not involve work directly
related to the management or general business operations of the
employer. Such employees also do not qualify for the administrative
exemption because their work involves the use of skills and technical
abilities in gathering factual information, applying known standards or
prescribed procedures, determining which procedure to follow, or
determining whether prescribed standards or criteria are met.
Sec. 541.204 Educational establishments.
(a) The term ``employee employed in a bona fide administrative capacity” in section 13(a)(1) of the Act also includes employees:
(1) Compensated for services on a salary or fee basis at a rate of
not less than $455 per week (or $380 per week, if employed in American
Samoa by employers other than the Federal Government) exclusive of
board, lodging or other facilities, or on a salary basis which is at
least equal to the entrance salary for teachers in the educational
establishment by which employed; and
(2) Whose primary duty is performing administrative functions
directly related to academic instruction or training in an educational
establishment or department or subdivision thereof.
(b) The term educational establishment'' means an elementary or
secondary school system, an institution of higher education or other
educational institution. Sections 3(v) and 3(w) of the Act define
elementary and secondary schools as those day or residential schools
that provide elementary or secondary education, as determined under
State law. Under the laws of most States, such education includes the
curriculums in grades 1 through 12; under many it includes also the
introductory programs in kindergarten. Such education in some States
may also include nursery school programs in elementary education and
junior college curriculums in secondary education. The termother
educational establishment” includes special schools for mentally or
physically disabled or gifted children, regardless of any
classification of such schools as elementary, secondary or higher.
Factors relevant in determining whether post-secondary career programs
are educational institutions include whether the school is licensed by
a state agency responsible for the state’s educational system or
accredited by a nationally recognized accrediting organization for
career schools. Also, for purposes of the exemption, no distinction is
drawn between public and private schools, or between those operated for
profit and those that are not for profit.
(c) The phrase “performing administrative functions directly
related to academic instruction or training” means work related to the
academic operations and functions in a school rather than to
administration along the lines of general business operations. Such
academic administrative functions include operations directly in the
field of education. Jobs relating to areas outside the educational
field are not
within the definition of academic administration.
(1) Employees engaged in academic administrative functions include:
the superintendent or other head of an elementary or secondary school
system, and any assistants, responsible for administration of such
matters as curriculum, quality and methods of instructing, measuring
and testing the learning potential and achievement of students,
establishing and maintaining academic and grading standards, and other
aspects of the teaching program; the principal and any vice-principals
responsible for the operation of an elementary or secondary school;
department heads in institutions of higher education responsible for
the administration of the mathematics department, the English
department, the foreign language department, etc.; academic counselors
who perform work such as administering school testing programs,
assisting students with academic problems and advising students
concerning degree requirements; and other employees with similar
responsibilities.
(2) Jobs relating to building management and maintenance, jobs
relating to the health of the students, and academic staff such as
social workers, psychologists, lunch room managers or dietitians do not
perform academic administrative functions. Although such work is not
considered academic administration, such employees may qualify for
exemption under Sec. 541.200 or under other sections of this part,
provided the requirements for such exemptions are met.
Subpart D–Professional Employees
Sec. 541.300 General rule for professional employees.
(a) The term ``employee employed in a bona fide professional capacity” in section 13(a)(1) of the Act shall mean any employee:
(1) Compensated on a salary or fee basis at a rate of not less than
$455 per week (or $380 per week, if employed in American Samoa by
employers other than the Federal Government), exclusive of board,
lodging, or other facilities; and
(2) Whose primary duty is the performance of work:
(i) Requiring knowledge of an advanced type in a field of science
or learning customarily acquired by a prolonged course of specialized
intellectual instruction; or
(ii) Requiring invention, imagination, originality or talent in a
recognized field of artistic or creative endeavor.
(b) The term salary basis'' is defined at Sec. 541.602;fee
basis” is defined at Sec. 541.605; board, lodging or other
facilities'' is defined at Sec. 541.606; andprimary duty” is
defined at Sec. 541.700.
Sec. 541.301 Learned professionals.
(a) To qualify for the learned professional exemption, an employee’s primary duty must be the performance of work requiring
advanced knowledge in a field of science or learning customarily
acquired by a prolonged course of specialized intellectual instruction.
This primary duty test includes three elements:
(1) The employee must perform work requiring advanced knowledge;
(2) The advanced knowledge must be in a field of science or
learning; and
(3) The advanced knowledge must be customarily acquired by a
prolonged course of specialized intellectual instruction.
(b) The phrase work requiring advanced knowledge'' means work
which is predominantly intellectual in character, and which includes
work requiring the consistent exercise of discretion and judgment, as
distinguished from performance of routine mental, manual, mechanical or
physical work. An employee who performs work requiring advanced
knowledge generally uses the advanced knowledge to analyze, interpret
or make deductions from varying facts or circumstances. Advanced
knowledge cannot be attained at the high school level.
(c) The phrasefield of science or learning” includes the
traditional professions of law, medicine, theology, accounting,
actuarial computation, engineering, architecture, teaching, various
types of physical, chemical and biological sciences, pharmacy and other
similar occupations that have a recognized professional status as
distinguished from the mechanical arts or skilled trades where in some
instances the knowledge is of a fairly advanced type, but is not in a
field of science or learning.
(d) The phrase customarily acquired by a prolonged course of
specialized intellectual instruction'' restricts the exemption to
professions where specialized academic training is a standard
prerequisite for entrance into the profession. The best prima facie
evidence that an employee meets this requirement is possession of the
appropriate academic degree. However, the wordcustomarily” means
that the exemption is also available to employees in such professions
who have substantially the same knowledge level and perform
substantially the same work as the degreed employees, but who attained
the advanced knowledge through a combination of work experience and
intellectual instruction. Thus, for example, the learned professional
exemption is available to the occasional lawyer who has not gone to law
school, or the occasional chemist who is not the possessor of a degree
in chemistry. However, the learned professional exemption is not
available for occupations that customarily may be performed with only
the general knowledge acquired by an academic degree in any field, with
knowledge acquired through an apprenticeship, or with training in the
performance of routine mental, manual, mechanical or physical
processes. The learned professional exemption also does not apply to
occupations in which most employees have acquired their skill by
experience rather than by advanced specialized intellectual
instruction.
(e) (1) Registered or certified medical technologists. Registered
or certified medical technologists who have successfully completed
three academic years of pre-professional study in an accredited college
or university plus a fourth year of professional course work in a
school of medical technology approved by the Council of Medical
Education of the American Medical Association generally meet the duties
requirements for the learned professional exemption.
(2) Nurses. Registered nurses who are registered by the appropriate
State examining board generally meet the duties requirements for the
learned professional exemption. Licensed practical nurses and other
similar health care employees, however, generally do not qualify as
exempt learned professionals because possession of a specialized
advanced academic degree is not a standard prerequisite for entry into
such occupations.
(3) Dental hygienists. Dental hygienists who have successfully
completed four academic years of pre-professional and professional
study in an accredited college or university approved by the Commission
on Accreditation of Dental and Dental Auxiliary Educational Programs of
the American Dental Association generally meet the duties requirements
for the learned professional exemption.
(4) Physician assistants. Physician assistants who have
successfully completed four academic years of pre-professional and
professional study, including graduation from a physician assistant
program accredited by the Accreditation Review Commission on Education
for the Physician Assistant, and who are certified by the National
Commission on Certification of Physician Assistants generally meet the
duties requirements for the learned professional exemption.
(5) Accountants. Certified public accountants generally meet the
duties requirements for the learned professional exemption. In
addition, many other accountants who are not certified public
accountants but perform similar job duties may qualify as exempt
learned professionals. However, accounting clerks, bookkeepers and
other employees who normally perform a great deal of routine work
generally will not qualify as exempt professionals.
(6) Chefs. Chefs, such as executive chefs and sous chefs, who have
attained a four-year specialized academic degree in a culinary arts
program, generally meet the duties requirements for the learned
professional exemption. The learned professional exemption is not
available to cooks who perform predominantly routine mental, manual,
mechanical or physical work.
(7) Paralegals. Paralegals and legal assistants generally do not
qualify as exempt learned professionals because an advanced specialized
academic degree is not a standard prerequisite for entry into the
field. Although many paralegals possess general four-year advanced
degrees, most specialized paralegal programs are two-year associate
degree programs from a community college or equivalent institution.
However, the learned professional exemption is available for paralegals
who possess advanced specialized degrees in other professional fields
and apply advanced knowledge in that field in the performance of their
duties. For example, if a law firm hires an engineer as a paralegal to
provide expert advice on product liability cases or to assist on patent
matters, that engineer would qualify for exemption.
(8) Athletic trainers. Athletic trainers who have successfully
completed four academic years of pre-professional and professional
study in a specialized curriculum accredited by the Commission on
Accreditation of Allied Health Education Programs and who are certified
by the Board of Certification of the National Athletic Trainers
Association Board of Certification generally meet the duties
requirements for the learned professional exemption.
(9) Funeral directors or embalmers. Licensed funeral directors and
embalmers who are licensed by and working in a state that requires
successful completion of four academic years of pre-professional and
professional study, including graduation from a college of mortuary
science accredited by the American Board of Funeral Service Education,
generally meet the duties requirements for the learned professional
exemption.
(f) The areas in which the professional exemption may be available
are expanding. As knowledge is developed, academic training is
broadened and specialized degrees are offered in new and diverse
fields, thus creating new specialists in particular fields of science
or learning. When an advanced specialized degree has become a standard
requirement for a particular occupation, that occupation may have
acquired the characteristics of a learned profession. Accrediting and
certifying organizations similar to those listed in paragraphs (e)(1),
(e)(3), (e)(4), (e)(8) and (e)(9) of this section also may be created
in the future. Such organizations may develop similar specialized
curriculums and certification programs which, if a standard requirement
for a particular occupation, may indicate that the occupation has
acquired the characteristics of a learned profession.
Sec. 541.302 Creative professionals.
(a) To qualify for the creative professional exemption, an employee’s primary duty must be the performance of work requiring
invention, imagination, originality or talent in a recognized field of
artistic or creative endeavor as opposed to routine mental, manual,
mechanical or physical work. The exemption does not apply to work which
can be produced by a person with general manual or intellectual ability
and training.
(b) To qualify for exemption as a creative professional, the work
performed must be in a recognized field of artistic or creative
endeavor.'' This includes such fields as music, writing, acting and the
graphic arts.
(c) The requirement ofinvention, imagination, originality or
talent” distinguishes the creative professions from work that
primarily depends on intelligence, diligence and accuracy. The duties
of employees vary widely, and exemption as a creative professional
depends on the extent of the invention, imagination, originality or
talent exercised by the employee. Determination of exempt creative
professional status, therefore, must be made on a case-by-case basis.
This requirement generally is met by actors, musicians, composers,
conductors, and soloists; painters who at most are given the subject
matter of their painting; cartoonists who are merely told the title or
underlying concept of a cartoon and must rely on their own creative
ability to express the concept; essayists, novelists, short-story
writers and screen-play writers who choose their own subjects and hand
in a finished piece of work to their employers (the majority of such
persons are, of course, not employees but self-employed); and persons
holding the more responsible writing positions in advertising agencies.
This requirement generally is not met by a person who is employed as a
copyist, as an “animator” of motion-picture cartoons, or as a
retoucher of photographs, since such work is not properly described as
creative in character.
(d) Journalists may satisfy the duties requirements for the
creative professional exemption if their primary duty is work requiring
invention, imagination, originality or talent, as opposed to work which
depends primarily on intelligence, diligence and accuracy. Employees of
newspapers, magazines, television and other media are not exempt
creative professionals if they only collect, organize and record
information that is routine or already public, or if they do not
contribute a unique interpretation or analysis to a news product. Thus,
for example, newspaper reporters who merely rewrite press releases or
who write standard recounts of public information by gathering facts on
routine community events are not exempt creative professionals.
Reporters also do not qualify as exempt creative professionals if their
work product is subject to substantial control by the employer.
However, journalists may qualify as exempt creative professionals if
their primary duty is performing on the air in radio, television or
other electronic media; conducting investigative interviews; analyzing
or interpreting public events; writing editorials, opinion columns or
other commentary; or acting as a narrator or commentator.
Sec. 541.303 Teachers.
(a) The term ``employee employed in a bona fide professional capacity” in section 13(a)(1) of the Act also means any employee with
a primary duty of teaching, tutoring, instructing or lecturing in the
activity of imparting knowledge and who is employed and engaged in this
activity as a teacher in an educational establishment by which the
employee is employed. The term “educational establishment” is defined
in Sec. 541.204(b).
(b) Exempt teachers include, but are not limited to: Regular
academic teachers; teachers of kindergarten or nursery school pupils;
teachers of gifted or disabled children; teachers of skilled and semi-
skilled trades and occupations; teachers engaged in automobile driving
instruction; aircraft flight instructors; home economics teachers; and
vocal or instrumental
music instructors. Those faculty members who are engaged as teachers
but also spend a considerable amount of their time in extracurricular
activities such as coaching athletic teams or acting as moderators or
advisors in such areas as drama, speech, debate or journalism are
engaged in teaching. Such activities are a recognized part of the
schools’ responsibility in contributing to the educational development
of the student.
(c) The possession of an elementary or secondary teacher’s
certificate provides a clear means of identifying the individuals
contemplated as being within the scope of the exemption for teaching
professionals. Teachers who possess a teaching certificate qualify for
the exemption regardless of the terminology (e.g., permanent,
conditional, standard, provisional, temporary, emergency, or unlimited)
used by the State to refer to different kinds of certificates. However,
private schools and public schools are not uniform in requiring a
certificate for employment as an elementary or secondary school
teacher, and a teacher’s certificate is not generally necessary for
employment in institutions of higher education or other educational
establishments. Therefore, a teacher who is not certified may be
considered for exemption, provided that such individual is employed as
a teacher by the employing school or school system.
(d) The requirements of Sec. 541.300 and Subpart G (salary
requirements) of this part do not apply to the teaching professionals
described in this section.
Sec. 541.304 Practice of law or medicine.
(a) The term ``employee employed in a bona fide professional capacity” in section 13(a)(1) of the Act also shall mean:
(1) Any employee who is the holder of a valid license or
certificate permitting the practice of law or medicine or any of their
branches and is actually engaged in the practice thereof; and
(2) Any employee who is the holder of the requisite academic degree
for the general practice of medicine and is engaged in an internship or
resident program pursuant to the practice of the profession.
(b) In the case of medicine, the exemption applies to physicians
and other practitioners licensed and practicing in the field of medical
science and healing or any of the medical specialties practiced by
physicians or practitioners. The term “physicians” includes medical
doctors including general practitioners and specialists, osteopathic
physicians (doctors of osteopathy), podiatrists, dentists (doctors of
dental medicine), and optometrists (doctors of optometry or bachelors
of science in optometry).
(c) Employees engaged in internship or resident programs, whether
or not licensed to practice prior to commencement of the program,
qualify as exempt professionals if they enter such internship or
resident programs after the earning of the appropriate degree required
for the general practice of their profession.
(d) The requirements of Sec. 541.300 and subpart G (salary
requirements) of this part do not apply to the employees described in
this section.
Subpart E–Computer Employees
Sec. 541.400 General rule for computer employees.
(a) Computer systems analysts, computer programmers, software engineers or other similarly skilled workers in the computer field are
eligible for exemption as professionals under section 13(a)(1) of the
Act and under section 13(a)(17) of the Act. Because job titles vary
widely and change quickly in the computer industry, job titles are not
determinative of the applicability of this exemption.
(b) The section 13(a)(1) exemption applies to any computer employee
compensated on a salary or fee basis at a rate of not less than $455
per week (or $380 per week, if employed in American Samoa by employers
other than the Federal Government), exclusive of board, lodging or
other facilities, and the section 13(a)(17) exemption applies to any
computer employee compensated on an hourly basis at a rate not less
than $27.63 an hour. In addition, under either section 13(a)(1) or
section 13(a)(17) of the Act, the exemptions apply only to computer
employees whose primary duty consists of:
(1) The application of systems analysis techniques and procedures,
including consulting with users, to determine hardware, software or
system functional specifications;
(2) The design, development, documentation, analysis, creation,
testing or modification of computer systems or programs, including
prototypes, based on and related to user or system design
specifications;
(3) The design, documentation, testing, creation or modification of
computer programs related to machine operating systems; or
(4) A combination of the aforementioned duties, the performance of
which requires the same level of skills.
(c) The term salary basis'' is defined at Sec. 541.602;fee
basis” is defined at Sec. 541.605; board, lodging or other
facilities'' is defined at Sec. 541.606; andprimary duty” is
defined at Sec. 541.700.
Sec. 541.401 Computer manufacture and repair.
The exemption for employees in computer occupations does not include employees engaged in the manufacture or repair of computer
hardware and related equipment. Employees whose work is highly
dependent upon, or facilitated by, the use of computers and computer
software programs (e.g., engineers, drafters and others skilled in
computer-aided design software), but who are not primarily engaged in
computer systems analysis and programming or other similarly skilled
computer-related occupations identified in Sec. 541.400(b), are also
not exempt computer professionals.
Sec. 541.402 Executive and administrative computer employees.
Computer employees within the scope of this exemption, as well as those employees not within its scope, may also have executive and
administrative duties which qualify the employees for exemption under
subpart B or subpart C of this part. For example, systems analysts and
computer programmers generally meet the duties requirements for the
administrative exemption if their primary duty includes work such as
planning, scheduling, and coordinating activities required to develop
systems to solve complex business, scientific or engineering problems
of the employer or the employer’s customers. Similarly, a senior or
lead computer programmer who manages the work of two or more other
programmers in a customarily recognized department or subdivision of
the employer, and whose recommendations as to the hiring, firing,
advancement, promotion or other change of status of the other
programmers are given particular weight, generally meets the duties
requirements for the executive exemption.
Subpart F–Outside Sales Employees
Sec. 541.500 General rule for outside sales employees.
(a) The term ``employee employed in the capacity of outside salesman” in section 13(a)(1) of the Act shall mean any employee:
(1) Whose primary duty is:
(i) making sales within the meaning of section 3(k) of the Act, or
(ii) obtaining orders or contracts for services or for the use of
facilities for
which a consideration will be paid by the client or customer; and
(2) Who is customarily and regularly engaged away from the
employer’s place or places of business in performing such primary duty.
(b) The term “primary duty” is defined at Sec. 541.700. In
determining the primary duty of an outside sales employee, work
performed incidental to and in conjunction with the employee’s own
outside sales or solicitations, including incidental deliveries and
collections, shall be regarded as exempt outside sales work. Other work
that furthers the employee’s sales efforts also shall be regarded as
exempt work including, for example, writing sales reports, updating or
revising the employee’s sales or display catalogue, planning
itineraries and attending sales conferences.
(c) The requirements of subpart G (salary requirements) of this
part do not apply to the outside sales employees described in this
section.
Sec. 541.501 Making sales or obtaining orders.
(a) Section 541.500 requires that the employee be engaged in:
(1) Making sales within the meaning of section 3(k) of the Act, or
(2) Obtaining orders or contracts for services or for the use of facilities.
(b) Sales within the meaning of section 3(k) of the Act include the
transfer of title to tangible property, and in certain cases, of
tangible and valuable evidences of intangible property. Section 3(k) of
the Act states that sale'' orsell” includes any sale, exchange,
contract to sell, consignment for sale, shipment for sale, or other
disposition.
(c) Exempt outside sales work includes not only the sales of
commodities, but also obtaining orders or contracts for services or
for the use of facilities for which a consideration will be paid by the
client or customer.'' Obtaining orders forthe use of facilities”
includes the selling of time on radio or television, the solicitation
of advertising for newspapers and other periodicals, and the
solicitation of freight for railroads and other transportation
agencies.
(d) The word “services” extends the outside sales exemption to
employees who sell or take orders for a service, which may be performed
for the customer by someone other than the person taking the order.
Sec. 541.502 Away from employer’s place of business.
An outside sales employee must be customarily and regularly engaged “away from the employer’s place or places of business.” The outside
sales employee is an employee who makes sales at the customer’s place
of business or, if selling door-to-door, at the customer’s home.
Outside sales does not include sales made by mail, telephone or the
Internet unless such contact is used merely as an adjunct to personal
calls. Thus, any fixed site, whether home or office, used by a
salesperson as a headquarters or for telephonic solicitation of sales
is considered one of the employer’s places of business, even though the
employer is not in any formal sense the owner or tenant of the
property. However, an outside sales employee does not lose the
exemption by displaying samples in hotel sample rooms during trips from
city to city; these sample rooms should not be considered as the
employer’s places of business. Similarly, an outside sales employee
does not lose the exemption by displaying the employer’s products at a
trade show. If selling actually occurs, rather than just sales
promotion, trade shows of short duration (i.e., one or two weeks)
should not be considered as the employer’s place of business.
Sec. 541.503 Promotion work.
(a) Promotion work is one type of activity often performed by persons who make sales, which may or may not be exempt outside sales
work, depending upon the circumstances under which it is performed.
Promotional work that is actually performed incidental to and in
conjunction with an employee’s own outside sales or solicitations is
exempt work. On the other hand, promotional work that is incidental to
sales made, or to be made, by someone else is not exempt outside sales
work. An employee who does not satisfy the requirements of this subpart
may still qualify as an exempt employee under other subparts of this
rule.
(b) A manufacturer’s representative, for example, may perform
various types of promotional activities such as putting up displays and
posters, removing damaged or spoiled stock from the merchant’s shelves
or rearranging the merchandise. Such an employee can be considered an
exempt outside sales employee if the employee’s primary duty is making
sales or contracts. Promotion activities directed toward consummation
of the employee’s own sales are exempt. Promotional activities designed
to stimulate sales that will be made by someone else are not exempt
outside sales work.
(c) Another example is a company representative who visits chain
stores, arranges the merchandise on shelves, replenishes stock by
replacing old with new merchandise, sets up displays and consults with
the store manager when inventory runs low, but does not obtain a
commitment for additional purchases. The arrangement of merchandise on
the shelves or the replenishing of stock is not exempt work unless it
is incidental to and in conjunction with the employee’s own outside
sales. Because the employee in this instance does not consummate the
sale nor direct efforts toward the consummation of a sale, the work is
not exempt outside sales work.
Sec. 541.504 Drivers who sell.
(a) Drivers who deliver products and also sell such products may qualify as exempt outside sales employees only if the employee has a
primary duty of making sales. In determining the primary duty of
drivers who sell, work performed incidental to and in conjunction with
the employee’s own outside sales or solicitations, including loading,
driving or delivering products, shall be regarded as exempt outside
sales work.
(b) Several factors should be considered in determining if a driver
has a primary duty of making sales, including, but not limited to: a
comparison of the driver’s duties with those of other employees engaged
as truck drivers and as salespersons; possession of a selling or
solicitor’s license when such license is required by law or ordinances;
presence or absence of customary or contractual arrangements concerning
amounts of products to be delivered; description of the employee’s
occupation in collective bargaining agreements; the employer’s
specifications as to qualifications for hiring; sales training;
attendance at sales conferences; method of payment; and proportion of
earnings directly attributable to sales.
(c) Drivers who may qualify as exempt outside sales employees
include:
(1) A driver who provides the only sales contact between the
employer and the customers visited, who calls on customers and takes
orders for products, who delivers products from stock in the employee’s
vehicle or procures and delivers the product to the customer on a later
trip, and who receives compensation commensurate with the volume of
products sold.
(2) A driver who obtains or solicits orders for the employer’s
products from persons who have authority to commit the customer for
purchases.
(3) A driver who calls on new prospects for customers along the
employee’s route and attempts to convince them of the desirability of
accepting regular delivery of goods.
(4) A driver who calls on established customers along the route and
persuades regular customers to accept delivery of increased amounts of
goods or of new products, even though the initial sale or agreement for
delivery was made by someone else.
(d) Drivers who generally would not qualify as exempt outside sales
employees include:
(1) A route driver whose primary duty is to transport products sold
by the employer through vending machines and to keep such machines
stocked, in good operating condition, and in good locations.
(2) A driver who often calls on established customers day after day
or week after week, delivering a quantity of the employer’s products at
each call when the sale was not significantly affected by solicitations
of the customer by the delivering driver or the amount of the sale is
determined by the volume of the customer’s sales since the previous
delivery.
(3) A driver primarily engaged in making deliveries to customers
and performing activities intended to promote sales by customers
(including placing point-of-sale and other advertising materials, price
stamping commodities, arranging merchandise on shelves, in coolers or
in cabinets, rotating stock according to date, and cleaning and
otherwise servicing display cases), unless such work is in furtherance
of the driver’s own sales efforts.
Subpart G–Salary Requirements
Sec. 541.600 Amount of salary required.
(a) To qualify as an exempt executive, administrative or professional employee under section 13(a)(1) of the Act, an employee
must be compensated on a salary basis at a rate of not less than $455
per week (or $380 per week, if employed in American Samoa by employers
other than the Federal Government), exclusive of board, lodging or
other facilities. Administrative and professional employees may also be
paid on a fee basis, as defined in Sec. 541.605.
(b) The $455 a week may be translated into equivalent amounts for
periods longer than one week. The requirement will be met if the
employee is compensated biweekly on a salary basis of $910, semimonthly
on a salary basis of $985.83, or monthly on a salary basis of
$1,971.66. However, the shortest period of payment that will meet this
compensation requirement is one week.
(c) In the case of academic administrative employees, the
compensation requirement also may be met by compensation on a salary
basis at a rate at least equal to the entrance salary for teachers in
the educational establishment by which the employee is employed, as
provided in Sec. 541.204(a)(1).
(d) In the case of computer employees, the compensation requirement
also may be met by compensation on an hourly basis at a rate not less
than $27.63 an hour, as provided in Sec. 541.400(b).
(e) In the case of professional employees, the compensation
requirements in this section shall not apply to employees engaged as
teachers (see Sec. 541.303); employees who hold a valid license or
certificate permitting the practice of law or medicine or any of their
branches and are actually engaged in the practice thereof (see Sec.
541.304); or to employees who hold the requisite academic degree for
the general practice of medicine and are engaged in an internship or
resident program pursuant to the practice of the profession (see Sec.
541.304). In the case of medical occupations, the exception from the
salary or fee requirement does not apply to pharmacists, nurses,
therapists, technologists, sanitarians, dietitians, social workers,
psychologists, psychometrists, or other professions which service the
medical profession.
Sec. 541.601 Highly compensated employees.
(a) An employee with total annual compensation of at least $100,000 is deemed exempt under section 13(a)(1) of the Act if the employee
customarily and regularly performs any one or more of the exempt duties
or responsibilities of an executive, administrative or professional
employee identified in subparts B, C or D of this part.
(b) (1) “Total annual compensation” must include at least $455
per week paid on a salary or fee basis. Total annual compensation may
also include commissions, nondiscretionary bonuses and other
nondiscretionary compensation earned during a 52-week period. Total
annual compensation does not include board, lodging and other
facilities as defined in Sec. 541.606, and does not include payments
for medical insurance, payments for life insurance, contributions to
retirement plans and the cost of other fringe benefits.
(2) If an employee’s total annual compensation does not total at
least the minimum amount established in paragraph (a) of this section
by the last pay period of the 52-week period, the employer may, during
the last pay period or within one month after the end of the 52-week
period, make one final payment sufficient to achieve the required
level. For example, an employee may earn $80,000 in base salary, and
the employer may anticipate based upon past sales that the employee
also will earn $20,000 in commissions. However, due to poor sales in
the final quarter of the year, the employee actually only earns $10,000
in commissions. In this situation, the employer may within one month
after the end of the year make a payment of at least $10,000 to the
employee. Any such final payment made after the end of the 52-week
period may count only toward the prior year’s total annual compensation
and not toward the total annual compensation in the year it was paid.
If the employer fails to make such a payment, the employee does not
qualify as a highly compensated employee, but may still qualify as
exempt under subparts B, C or D of this part.
(3) An employee who does not work a full year for the employer,
either because the employee is newly hired after the beginning of the
year or ends the employment before the end of the year, may qualify for
exemption under this section if the employee receives a pro rata
portion of the minimum amount established in paragraph (a) of this
section, based upon the number of weeks that the employee will be or
has been employed. An employer may make one final payment as under
paragraph (b)(2) of this section within one month after the end of
employment.
(4) The employer may utilize any 52-week period as the year, such
as a calendar year, a fiscal year, or an anniversary of hire year. If
the employer does not identify some other year period in advance, the
calendar year will apply.
(c) A high level of compensation is a strong indicator of an
employee’s exempt status, thus eliminating the need for a detailed
analysis of the employee’s job duties. Thus, a highly compensated
employee will qualify for exemption if the employee customarily and
regularly performs any one or more of the exempt duties or
responsibilities of an executive, administrative or professional
employee identified in subparts B, C or D of this part. An employee may
qualify as a highly compensated executive employee, for example, if the
employee customarily and regularly directs the work of two or more
other employees, even though the employee does not meet all of the
other requirements for the executive exemption under Sec. 541.100.
(d) This section applies only to employees whose primary duty
includes performing office or non-manual work. Thus, for example, non-
management production-line workers and non-management employees in
maintenance, construction and similar occupations
such as carpenters, electricians, mechanics, plumbers, iron workers,
craftsmen, operating engineers, longshoremen, construction workers,
laborers and other 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 they might be.
Sec. 541.602 Salary basis.
(a) General rule. An employee will be considered to be paid on a “salary basis” within the meaning of these regulations if the
employee regularly receives each pay period on a weekly, or less
frequent basis, a predetermined amount constituting all or part of the
employee’s compensation, which amount is not subject to reduction
because of variations in the quality or quantity of the work performed.
Subject to the exceptions provided in paragraph (b) of this section, an
exempt employee must receive the full salary for any week in which the
employee performs any work without regard to the number of days or
hours worked. Exempt employees need not be paid for any workweek in
which they perform no work. An employee is not paid on a salary basis
if deductions from the employee’s predetermined compensation are made
for absences occasioned by the employer or by the operating
requirements of the business. If the employee is ready, willing and
able to work, deductions may not be made for time when work is not
available.
(b) Exceptions. The prohibition against deductions from pay in the
salary basis requirement is subject to the following exceptions:
(1) Deductions from pay may be made when an exempt employee is
absent from work for one or more full days for personal reasons, other
than sickness or disability. Thus, if an employee is absent for two
full days to handle personal affairs, the employee’s salaried status
will not be affected if deductions are made from the salary for two
full-day absences. However, if an exempt employee is absent for one and
a half days for personal reasons, the employer can deduct only for the
one full-day absence.
(2) Deductions from pay may be made for absences of one or more
full days occasioned by sickness or disability (including work-related
accidents) if the deduction is made in accordance with a bona fide
plan, policy or practice of providing compensation for loss of salary
occasioned by such sickness or disability. The employer is not required
to pay any portion of the employee’s salary for full-day absences for
which the employee receives compensation under the plan, policy or
practice. Deductions for such full-day absences also may be made before
the employee has qualified under the plan, policy or practice, and
after the employee has exhausted the leave allowance thereunder. Thus,
for example, if an employer maintains a short-term disability insurance
plan providing salary replacement for 12 weeks starting on the fourth
day of absence, the employer may make deductions from pay for the three
days of absence before the employee qualifies for benefits under the
plan; for the twelve weeks in which the employee receives salary
replacement benefits under the plan; and for absences after the
employee has exhausted the 12 weeks of salary replacement benefits.
Similarly, an employer may make deductions from pay for absences of one
or more full days if salary replacement benefits are provided under a
State disability insurance law or under a State workers’ compensation
law.
(3) While an employer cannot make deductions from pay for absences
of an exempt employee occasioned by jury duty, attendance as a witness
or temporary military leave, the employer can offset any amounts
received by an employee as jury fees, witness fees or military pay for
a particular week against the salary due for that particular week
without loss of the exemption.
(4) Deductions from pay of exempt employees may be made for
penalties imposed in good faith for infractions of safety rules of
major significance. Safety rules of major significance include those
relating to the prevention of serious danger in the workplace or to
other employees, such as rules prohibiting smoking in explosive plants,
oil refineries and coal mines.
(5) Deductions from pay of exempt employees may be made for unpaid
disciplinary suspensions of one or more full days imposed in good faith
for infractions of workplace conduct rules. Such suspensions must be
imposed pursuant to a written policy applicable to all employees. Thus,
for example, an employer may suspend an exempt employee without pay for
three days for violating a generally applicable written policy
prohibiting sexual harassment. Similarly, an employer may suspend an
exempt employee without pay for twelve days for violating a generally
applicable written policy prohibiting workplace violence.
(6) An employer is not required to pay the full salary in the
initial or terminal week of employment. Rather, an employer may pay a
proportionate part of an employee’s full salary for the time actually
worked in the first and last week of employment. In such weeks, the
payment of an hourly or daily equivalent of the employee’s full salary
for the time actually worked will meet the requirement. However,
employees are not paid on a salary basis within the meaning of these
regulations if they are employed occasionally for a few days, and the
employer pays them a proportionate part of the weekly salary when so
employed.
(7) An employer is not required to pay the full salary for weeks in
which an exempt employee takes unpaid leave under the Family and
Medical Leave Act. Rather, when an exempt employee takes unpaid leave
under the Family and Medical Leave Act, an employer may pay a
proportionate part of the full salary for time actually worked. For
example, if an employee who normally works 40 hours per week uses four
hours of unpaid leave under the Family and Medical Leave Act, the
employer could deduct 10 percent of the employee’s normal salary that
week.
(c) When calculating the amount of a deduction from pay allowed
under paragraph (b) of this section, the employer may use the hourly or
daily equivalent of the employee’s full weekly salary or any other
amount proportional to the time actually missed by the employee. A
deduction from pay as a penalty for violations of major safety rules
under paragraph (b)(4) of this section may be made in any amount.
Sec. 541.603 Effect of improper deductions from salary.
(a) An employer who makes improper deductions from salary shall lose the exemption if the facts demonstrate that the employer did not
intend to pay employees on a salary basis. An actual practice of making
improper deductions demonstrates that the employer did not intend to
pay employees on a salary basis. The factors to consider when
determining whether an employer has an actual practice of making
improper deductions include, but are not limited to: the number of
improper deductions, particularly as compared to the number of employee
infractions warranting discipline; the time period during which the
employer made improper deductions; the number and geographic location
of employees whose salary was improperly reduced; the number and
geographic location of managers responsible for taking the improper
deductions; and whether the employer has a clearly communicated policy
permitting or prohibiting improper deductions.
(b) If the facts demonstrate that the employer has an actual
practice of
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
Administrative, Professional, Outside Sales and Computer Employees [[Continued from page 22270]] [[Page 22271]]
making improper deductions, the exemption is lost during the time
period in which the improper deductions were made for employees in the
same job classification working for the same managers responsible for
the actual improper deductions. Employees in different job
classifications or who work for different managers do not lose their
status as exempt employees. Thus, for example, if a manager at a
company facility routinely docks the pay of engineers at that facility
for partial-day personal absences, then all engineers at that facility
whose pay could have been improperly docked by the manager would lose
the exemption; engineers at other facilities or working for other
managers, however, would remain exempt.
(c) Improper deductions that are either isolated or inadvertent
will not result in loss of the exemption for any employees subject to
such improper deductions, if the employer reimburses the employees for
such improper deductions.
(d) If an employer has a clearly communicated policy that prohibits
the improper pay deductions specified in Sec. 541.602(a) and includes
a complaint mechanism, reimburses employees for any improper deductions
and makes a good faith commitment to comply in the future, such
employer will not lose the exemption for any employees unless the
employer willfully violates the policy by continuing to make improper
deductions after receiving employee complaints. If an employer fails to
reimburse employees for any improper deductions or continues to make
improper deductions after receiving employee complaints, the exemption
is lost during the time period in which the improper deductions were
made for employees in the same job classification working for the same
managers responsible for the actual improper deductions. The best
evidence of a clearly communicated policy is a written policy that was
distributed to employees prior to the improper pay deductions by, for
example, providing a copy of the policy to employees at the time of
hire, publishing the policy in an employee handbook or publishing the
policy on the employer’s Intranet.
(e) This section shall not be construed in an unduly technical
manner so as to defeat the exemption.
Sec. 541.604 Minimum guarantee plus extras.
(a) An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis
requirement, if the employment arrangement also includes a guarantee of
at least the minimum weekly-required amount paid on a salary basis.
Thus, for example, an exempt employee guaranteed at least $455 each
week paid on a salary basis may also receive additional compensation of
a one percent commission on sales. An exempt employee also may receive
a percentage of the sales or profits of the employer if the employment
arrangement also includes a guarantee of at least $455 each week paid
on a salary basis. Similarly, the exemption is not lost if an exempt
employee who is guaranteed at least $455 each week paid on a salary
basis also receives additional compensation based on hours worked for
work beyond the normal workweek. Such additional compensation may be
paid on any basis (e.g., flat sum, bonus payment, straight-time hourly
amount, time and one-half or any other basis), and may include paid
time off.
(b) An exempt employee’s earnings may be computed on an hourly, a
daily or a shift basis, without losing the exemption or violating the
salary basis requirement, if the employment arrangement also includes a
guarantee of at least the minimum weekly required amount paid on a
salary basis regardless of the number of hours, days or shifts worked,
and a reasonable relationship exists between the guaranteed amount and
the amount actually earned. The reasonable relationship test will be
met if the weekly guarantee is roughly equivalent to the employee’s
usual earnings at the assigned hourly, daily or shift rate for the
employee’s normal scheduled workweek. Thus, for example, an exempt
employee guaranteed compensation of at least $500 for any week in which
the employee performs any work, and who normally works four or five
shifts each week, may be paid $150 per shift without violating the
salary basis requirement. The reasonable relationship requirement
applies only if the employee’s pay is computed on an hourly, daily or
shift basis. It does not apply, for example, to an exempt store manager
paid a guaranteed salary of $650 per week who also receives a
commission of one-half percent of all sales in the store or five
percent of the store’s profits, which in some weeks may total as much
as, or even more than, the guaranteed salary.
Sec. 541.605 Fee basis.
(a) Administrative and professional employees may be paid on a fee basis, rather than on a salary basis. An employee will be considered to
be paid on a fee basis'' within the meaning of these regulations if
the employee is paid an agreed sum for a single job regardless of the
time required for its completion. These payments resemble piecework
payments with the important distinction that generally afee” is
paid for the kind of job that is unique rather than for a series of
jobs repeated an indefinite number of times and for which payment on an
identical basis is made over and over again. Payments based on the
number of hours or days worked and not on the accomplishment of a given
single task are not considered payments on a fee basis.
(b) To determine whether the fee payment meets the minimum amount
of salary required for exemption under these regulations, the amount
paid to the employee will be tested by determining the time worked on
the job and whether the fee payment is at a rate that would amount to
at least $455 per week if the employee worked 40 hours. Thus, an artist
paid $250 for a picture that took 20 hours to complete meets the
minimum salary requirement for exemption since earnings at this rate
would yield the artist $500 if 40 hours were worked.
Sec. 541.606 Board, lodging or other facilities.
(a) To qualify for exemption under section 13(a)(1) of the Act, an employee must earn the minimum salary amount set forth in Sec.
541.600, exclusive of board, lodging or other facilities.'' The
phraseexclusive of board, lodging or other facilities” means free
and clear'' or independent of any claimed credit for non-cash items of
value that an employer may provide to an employee. Thus, the costs
incurred by an employer to provide an employee with board, lodging or
other facilities may not count towards the minimum salary amount
required for exemption under this part 541. Such separate transactions
are not prohibited between employers and their exempt employees, but
the costs to employers associated with such transactions may not be
considered when determining if an employee has received the full
required minimum salary payment.
(b) Regulations defining what constitutesboard, lodging, or
other facilities” are contained in 29 CFR part 531. As described in 29
CFR 531.32, the term “other facilities” refers to items similar to
board and lodging, such as meals furnished at company restaurants or
cafeterias or by hospitals, hotels, or restaurants to their employees;
meals, dormitory rooms, and tuition furnished by a college to its
student employees; merchandise furnished at company stores or
commissaries, including articles of food, clothing, and household
effects; housing furnished for dwelling purposes; and transportation
furnished
to employees for ordinary commuting between their homes and work.
Subpart H–Definitions and Miscellaneous Provisions
Sec. 541.700 Primary duty.
(a) To qualify for exemption under this part, an employee's primary duty'' must be the performance of exempt work. The term
primary duty” means the principal, main, major or most important
duty that the employee performs. Determination of an employee’s primary
duty must be based on all the facts in a particular case, with the
major emphasis on the character of the employee’s job as a whole.
Factors to consider when determining the primary duty of an employee
include, but are not limited to, the relative importance of the exempt
duties as compared with other types of duties; the amount of time spent
performing exempt work; the employee’s relative freedom from direct
supervision; and the relationship between the employee’s salary and the
wages paid to other employees for the kind of nonexempt work performed
by the employee.
(b) The amount of time spent performing exempt work can be a useful
guide in determining whether exempt work is the primary duty of an
employee. Thus, employees who spend more than 50 percent of their time
performing exempt work will generally satisfy the primary duty
requirement. Time alone, however, is not the sole test, and nothing in
this section requires that exempt employees spend more than 50 percent
of their time performing exempt work. Employees who do not spend more
than 50 percent of their time performing exempt duties may nonetheless
meet the primary duty requirement if the other factors support such a
conclusion.
(c) Thus, for example, assistant managers in a retail establishment
who perform exempt executive work such as supervising and directing the
work of other employees, ordering merchandise, managing the budget and
authorizing payment of bills may have management as their primary duty
even if the assistant managers spend more than 50 percent of the time
performing nonexempt work such as running the cash register. However,
if such assistant managers are closely supervised and earn little more
than the nonexempt employees, the assistant managers generally would
not satisfy the primary duty requirement.
Sec. 541.701 Customarily and regularly.
The phrase ``customarily and regularly'' means a frequency that must be greater than occasional but which, of course, may be less than
constant. Tasks or work performed “customarily and regularly”
includes work normally and recurrently performed every workweek; it
does not include isolated or one-time tasks.
Sec. 541.702 Exempt and nonexempt work.
The term ``exempt work'' means all work described in Sec. Sec. 541.100, 541.101, 541.200, 541.300, 541.301, 541.302, 541.303, 541.304,
541.400 and 541.500, and the activities directly and closely related to
such work. All other work is considered “nonexempt.”
Sec. 541.703 Directly and closely related.
(a) Work that is ``directly and closely related'' to the performance of exempt work is also considered exempt work. The phrase
directly and closely related'' means tasks that are related to exempt
duties and that contribute to or facilitate performance of exempt work.
Thus,directly and closely related” work may include physical tasks
and menial tasks that arise out of exempt duties, and the routine work
without which the exempt employee’s exempt work cannot be performed
properly. Work directly and closely related'' to the performance of
exempt duties may also include recordkeeping; monitoring and adjusting
machinery; taking notes; using the computer to create documents or
presentations; opening the mail for the purpose of reading it and
making decisions; and using a photocopier or fax machine. Work is not
directly and closely related” if the work is remotely related or
completely unrelated to exempt duties.
(b) The following examples further illustrate the type of work that
is and is not normally considered as directly and closely related to
exempt work:
(1) Keeping time, production or sales records for subordinates is
work directly and closely related to an exempt executive’s function of
managing a department and supervising employees.
(2) The distribution of materials, merchandise or supplies to
maintain control of the flow of and expenditures for such items is
directly and closely related to the performance of exempt duties.
(3) A supervisor who spot checks and examines the work of
subordinates to determine whether they are performing their duties
properly, and whether the product is satisfactory, is performing work
which is directly and closely related to managerial and supervisory
functions, so long as the checking is distinguishable from the work
ordinarily performed by a nonexempt inspector.
(4) A supervisor who sets up a machine may be engaged in exempt
work, depending upon the nature of the industry and the operation. In
some cases the setup work, or adjustment of the machine for a
particular job, is typically performed by the same employees who
operate the machine. Such setup work is part of the production
operation and is not exempt. In other cases, the setting up of the work
is a highly skilled operation which the ordinary production worker or
machine tender typically does not perform. In large plants, non-
supervisors may perform such work. However, particularly in small
plants, such work may be a regular duty of the executive and is
directly and closely related to the executive’s responsibility for the
work performance of subordinates and for the adequacy of the final
product. Under such circumstances, it is exempt work.
(5) A department manager in a retail or service establishment who
walks about the sales floor observing the work of sales personnel under
the employee’s supervision to determine the effectiveness of their
sales techniques, checks on the quality of customer service being
given, or observes customer preferences is performing work which is
directly and closely related to managerial and supervisory functions.
(6) A business consultant may take extensive notes recording the
flow of work and materials through the office or plant of the client;
after returning to the office of the employer, the consultant may
personally use the computer to type a report and create a proposed
table of organization. Standing alone, or separated from the primary
duty, such note-taking and typing would be routine in nature. However,
because this work is necessary for analyzing the data and making
recommendations, the work is directly and closely related to exempt
work. While it is possible to assign note-taking and typing to
nonexempt employees, and in fact it is frequently the practice to do
so, delegating such routine tasks is not required as a condition of
exemption.
(7) A credit manager who makes and administers the credit policy of
the employer, establishes credit limits for customers, authorizes the
shipment of orders on credit, and makes decisions on whether to exceed
credit limits would be performing work exempt under Sec. 541.200. Work
that is directly and closely related to these exempt duties may include
checking the status of accounts to determine whether the credit limit
would be exceeded by the shipment of a new order, removing credit
reports from the files for analysis,
and writing letters giving credit data and experience to other
employers or credit agencies.
(8) A traffic manager in charge of planning a company’s
transportation, including the most economical and quickest routes for
shipping merchandise to and from the plant, contracting for common-
carrier and other transportation facilities, negotiating with carriers
for adjustments for damages to merchandise, and making the necessary
rearrangements resulting from delays, damages or irregularities in
transit, is performing exempt work. If the employee also spends part of
the day taking telephone orders for local deliveries, such order-taking
is a routine function and is not directly and closely related to the
exempt work.
(9) An example of work directly and closely related to exempt
professional duties is a chemist performing menial tasks such as
cleaning a test tube in the middle of an original experiment, even
though such menial tasks can be assigned to laboratory assistants.
(10) A teacher performs work directly and closely related to exempt
duties when, while taking students on a field trip, the teacher drives
a school van or monitors the students’ behavior in a restaurant.
Sec. 541.704 Use of manuals.
The use of manuals, guidelines or other established procedures containing or relating to highly technical, scientific, legal,
financial or other similarly complex matters that can be understood or
interpreted only by those with advanced or specialized knowledge or
skills does not preclude exemption under section 13(a)(1) of the Act or
the regulations in this part. Such manuals and procedures provide
guidance in addressing difficult or novel circumstances and thus use of
such reference material would not affect an employee’s exempt status.
The section 13(a)(1) exemptions are not available, however, for
employees who simply apply well-established techniques or procedures
described in manuals or other sources within closely prescribed limits
to determine the correct response to an inquiry or set of
circumstances.
Sec. 541.705 Trainees.
The executive, administrative, professional, outside sales and computer employee exemptions do not apply to employees training for
employment in an executive, administrative, professional, outside sales
or computer employee capacity who are not actually performing the
duties of an executive, administrative, professional, outside sales or
computer employee.
Sec. 541.706 Emergencies.
(a) An exempt employee will not lose the exemption by performing work of a normally nonexempt nature because of the existence of an
emergency. Thus, when emergencies arise that threaten the safety of
employees, a cessation of operations or serious damage to the
employer’s property, any work performed in an effort to prevent such
results is considered exempt work.
(b) An “emergency” does not include occurrences that are not
beyond control or for which the employer can reasonably provide in the
normal course of business. Emergencies generally occur only rarely, and
are events that the employer cannot reasonably anticipate.
(c) The following examples illustrate the distinction between
emergency work considered exempt work and routine work that is not
exempt work:
(1) A mine superintendent who pitches in after an explosion and
digs out workers who are trapped in the mine is still a bona fide
executive.
(2) Assisting nonexempt employees with their work during periods of
heavy workload or to handle rush orders is not exempt work.
(3) Replacing a nonexempt employee during the first day or partial
day of an illness may be considered exempt emergency work depending on
factors such as the size of the establishment and of the executive’s
department, the nature of the industry, the consequences that would
flow from the failure to replace the ailing employee immediately, and
the feasibility of filling the employee’s place promptly.
(4) Regular repair and cleaning of equipment is not emergency work,
even when necessary to prevent fire or explosion; however, repairing
equipment may be emergency work if the breakdown of or damage to the
equipment was caused by accident or carelessness that the employer
could not reasonably anticipate.
Sec. 541.707 Occasional tasks.
Occasional, infrequently recurring tasks that cannot practicably be performed by nonexempt employees, but are the means for an exempt
employee to properly carry out exempt functions and responsibilities,
are considered exempt work. The following factors should be considered
in determining whether such work is exempt work: Whether the same work
is performed by any of the exempt employee’s subordinates;
practicability of delegating the work to a nonexempt employee; whether
the exempt employee performs the task frequently or occasionally; and
existence of an industry practice for the exempt employee to perform
the task.
Sec. 541.708 Combination exemptions.
Employees who perform a combination of exempt duties as set forth in the regulations in this part for executive, administrative,
professional, outside sales and computer employees may qualify for
exemption. Thus, for example, an employee whose primary duty involves a
combination of exempt administrative and exempt executive work may
qualify for exemption. In other words, work that is exempt under one
section of this part will not defeat the exemption under any other
section.
Sec. 541.709 Motion picture producing industry.
The requirement that the employee be paid ``on a salary basis'' does not apply to an employee in the motion picture producing industry
who is compensated at a base rate of at least $695 a week (exclusive of
board, lodging, or other facilities). Thus, an employee in this
industry who is otherwise exempt under subparts B, C or D of this part,
and who is employed at a base rate of at least $695 a week is exempt if
paid a proportionate amount (based on a week of not more than 6 days)
for any week in which the employee does not work a full workweek for
any reason. Moreover, an otherwise exempt employee in this industry
qualifies for exemption if the employee is employed at a daily rate
under the following circumstances:
(a) The employee is in a job category for which a weekly base rate
is not provided and the daily base rate would yield at least $695 if 6
days were worked; or
(b) The employee is in a job category having a weekly base rate of
at least $695 and the daily base rate is at least one-sixth of such
weekly base rate.
Sec. 541.710 Employees of public agencies.
(a) An employee of a public agency who otherwise meets the salary basis requirements of Sec. 541.602 shall not be disqualified from
exemption under Sec. Sec. 541.100, 541.200, 541.300 or 541.400 on the
basis that such employee is paid according to a pay system established
by statute, ordinance or regulation, or by a policy or practice
established pursuant to principles of public accountability, under
which the employee accrues personal leave and sick leave and which
requires the public agency employee’s pay to be reduced or such
employee to be placed on leave without pay for absences for personal
reasons or because
of illness or injury of less than one work-day when accrued leave is
not used by an employee because:
(1) Permission for its use has not been sought or has been sought
and denied;
(2) Accrued leave has been exhausted; or
(3) The employee chooses to use leave without pay.
(b) Deductions from the pay of an employee of a public agency for
absences due to a budget-required furlough shall not disqualify the
employee from being paid on a salary basis except in the workweek in
which the furlough occurs and for which the employee’s pay is
accordingly reduced.
BILLING CODE 4510-27-P