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Congressional Research Sei
Informing the legislitive debate sinee 1914
ice
August 24, 2023
The Fair Labor Standards Act (FLSA) Exemption for
Executive, Administrative, and Professional Employees
The Fair Labor Standards Act (FLSA) establishes a federal
minimum wage for most private and public sector
employees and generally requires overtime compensation at
a rate of one and one-half times an employee's regular
hourly rate for hours worked beyond a forty-hour
workweek. While broadly providing these employment
protections to most employees, the FLSA also includes
exemptions for certain specified employees. Section
13(a)(1) of the FLSA, found at 29 U.S.C. § 213(a)(1),
exempts from the statute's minimum wage and overtime
pay requirements bona fide executive, administrative, and
professional (EAP) employees and authorizes the Secretary
of Labor to define and delimit this exemption through
regulations.
The Department of Labor (DOL) announced plans in its
2023 spring regulatory agenda to issue a proposed rule
concerning the agency's implementation of the EAP
exemption in August 2023. As the Secretary of Labor
considers revised regulations for the EAP exemption, this
In Focus reviews the FLSA and examines DOL's current
regulations for EAP employees.
Background
Congress enacted the FLSA in 1938 to address and
eliminate labor conditions considered detrimental to
maintaining the minimum standard of living necessary for
health, efficiency, and [the] general well-being of workers.
The exemption for EAP employees reflected Congress's
sense that these workers typically earn salaries well above
the minimum wage and generally enjoy other forms of
compensation-such as above-average fringe benefits and
better opportunities for advancement-that set them apart
from nonexempt employees entitled to overtime pay.
DOL first issued regulations to implement the EAP
exemption in 1938. These regulations identified job duties
that the employee had to perform to qualify for the
exemption. DOL regulations issued in 1940 added a
minimum salary threshold for the exemption. Although the
salary and duty standards have changed over time, they
continue to form the basis of the exemption. In general,
under the current regulations, to be considered an exempt
EAP employee, the employee must satisfy a salary test and
a duties test. The regulations are codified in part 541 of
Title 29 of the Code of Federal Regulations.
EAP Exemption Salary Test
In general, to qualify for the EAP exemption under current
regulations, an employee must (1) be paid on a salary basis
and (2) be paid a salary that is above an amount determined
by DOL regulations.
The FLSA considers an employee to be paid on a salary
basis if the employee regularly receives a predetermined
amount on a weekly or less frequent basis that is not subject
to reduction either because of variations in the quality or
quantity of the work performed or because of absences
occasioned by the employer or the operating requirements
of the business. DOL regulations provide that the EAP
exemption may apply to administrative and professional
employees compensated on a fee basis (i.e., the employee is
paid an agreed sum for a single job regardless of the time
required for its completion).
Under DOL's current regulations, an employee must be
compensated on a salary basis (or fee basis where
permitted) at a rate of not less than $684 per week ($35,568
annually) for the EAP exemption to apply. The weekly
salary rate is lower-$455 per week-for employees (other
than those employed by the federal government) in the
Commonwealth of the Northern Mariana Islands, Guam,
Puerto Rico, or the U.S. Virgin Islands. The weekly salary
rate is $380 for employees (other than those employed by
the federal government) in American Samoa.
Salary Rules for Certain Occupations
The EAP exemption salary test does not apply to
physicians, lawyers, teachers, and outside sales workers
who may be exempt if they satisfy other duty and credential
requirements. Academic administrative personnel may be
exempt if paid at a rate of not less than $684 per week or a
salary at least equal to the entrance salary for teachers in the
educational establishment at which they are employed.
Employees in the motion picture producing industry need
not be paid on a salary basis so long as they are
compensated at a base rate of at least $1,043 per week (or a
proportionate amount based on the number of days worked)
and the duties test requirements (described below) are met.
EAP Exemption Duties Test
In addition to satisfying the salary test, an employee must
perform specified duties to qualify for the EAP exemption.
These duties vary based on whether an individual is an
executive, administrative, or professional employee. DOL's
current regulations identify the following duties for exempt
EAP employees:
Executive Employees
The employee's primary duty is management of the
enterprise in which the employee is employed or of a
customarily recognized department or subdivision
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