As you’re undoubtedly aware, some employees can be classified as “exempt” from the overtime provisions of the Fair Labor Standards Act (FLSA). There are several different categories under which employees can qualify for exemption: executive, administrative, professional, outside sales, etc.
One of the trickiest to evaluate is the “administrative” exemption.
According to the Department of Labor, in order to be eligible for the administrative exemption:
- The employee must be compensated on a salary basis at a rate not less than $455 per week;
- The employee’s primary duty must be 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;
- This primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.
But what does that mean?
Well, for starters, it’s about the employee’s actual job duties, not their job title. A clerical-level typist / file clerk is still a non-exempt employee, even if his title is “Senior Executive Administrative Assistant.”
Second, those job duties must not relate to operations or production. In other words, administrative staff provide support to operations / production — on traditional organizational charts, they would be referred to as “staff,” as opposed to “line” employees. Examples would include finance and accounting, marketing, public relations, legal compliance, payroll, HR, quality control, etc.
Third, the type of work the employee performs must be relatively high-level. In today’s work environment, many jobs require some “exercise of discretion and independent judgment,” but not all of them qualify for the administrative exemption.
How about some examples?
For instance, a secretary who occasionally makes travel arrangements for executives in her department, who assists with organizing the annual company picnic and orders the office supplies is likely not eligible for the administrative exemption. While she certainly exercises some discretion and judgment in her job, the types of decisions she makes are not “matters of significance” affecting the business.
On the other hand, buyer who determines which vendors the company will use, negotiates and signs contracts with them and decides what quantities of items to order and when to schedule delivery probably would qualify.
The difficult part about the administrative exemption is that there’s no hard-and-fast rule, no “bright line” you can point to where employees on one side are always exempt and those on the other are non-exempt. What is non-exempt at a large corporation might rise to a level of significance sufficient to qualify as exempt at a smaller company — and vice versa.
Here are a few questions to ask yourself to help decide:
- How much impact do the employee’s assignments have on overall business operations?
- Does the employee have the authority to set or interpret company policy on their own?
- Is the employee allowed to deviate from company policy without prior approval?
- Can the employee commit the employer in matters having significant financial impact? (In other words, what is the dollar limit of the contracts they can sign on their own without getting their boss’s sign-off?)
You Should Still Track Their Time
Of course, whether your employees qualify under the administrative exemption or one of the other exemption categories, it’s still a good idea to keep track of their time. (Here’s why.) Acroprint offers a number of office-appropriate time tracking solutions, including our newest (and, in my humble opinion, our way-coolest) solution: timeQplus FaceVerify. It’s an affordable, high-tech, totally hands-free facial recognition solution that’s excellent for a wide variety of work environments.