• Executive employees qualify for exemption under FLSA if their job duties and salary meet the criteria.

To qualify for the executive employee exemption, all of the following tests must be met. The employee must:

• Be compensated on a salary basis at a rate not less than $684 per week;
• Have the primary duty of managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
• Customarily and regularly direct the work of at least two or more other full-time employees or their equivalents; and
• Have the authority to hire or fire other employees; or, their suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees must be given particular weight.

Challenges

Common challenges and issues related to this exemption include:

• Is the person really salaried? Inappropriate deductions or fluctuations tied to hours worked may result in the loss of salaried status and the exemption.
• Is the person really in charge? In order to be exempt, the person must be in charge of a department or subdivision, not an assistant.
• What is the person’s primary duty? For exemption, that duty must be managing, not production work.