Can using AI risk employees’ exempt status?
Under the federal Fair Labor Standards Act (FLSA), employers may consider executive, administrative, or professional (EAP) employees to be nonexempt (hourly) unless they can show that the employees:
- • Are paid on a salary basis,
- • Are paid at least $684 every week they work, and
- • Perform certain duties.
The duties are where using artificial intelligence (AI) might put some employees at risk of no longer meeting the exemption. Duties under the EAP exemption generally look like this:
- Executive: The primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise; and having the authority to hire or fire other employees, or the employees’ suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees must be given particular weight.
- Administrative: The 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, and include the exercise of discretion and independent judgment with respect to matters of significance.
- Learned professional: The primary duty is performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment.
Overall, exempt employees must exercise independent judgment and discretion over matters of significance. AI use could replace or undermine this.
How this might happen
Here’s an example. Joe Employee is a department manager and is classified as exempt. He’s responsible for supervising a team, including hiring and firing, assigning tasks, and employee evaluations, so he meets the executive duties test for the EAP exemption.
If Joe were to begin using AI-powered systems that automatically assign tasks and provide hiring or firing recommendations based on metrics and past job performance, he might no longer exercise independent judgment and discretion. His title alone won’t be enough to maintain the exempt status. If he gives up his authority and discretion to AI and simply monitors what AI provides, he might not be exempt.
If, however, Joe uses AI but does much more than monitor its output, if he uses independent judgment and discretion when reviewing and validating the AI output, his exempt status should remain intact.
What to look for
In light of the AI-use explosion, employers might want to review their exempt employees’ duties to ensure that they still meet the FLSA’s exempt tests. If exempt employees stop using their judgment and discretion and rely heavily on AI, they might risk losing their exemption.
Such a review of duties and job descriptions could be quite an undertaking, but misclassifying employees can be expensive.
A review should consider whether:
- The employee/position still needs the use of judgment and discretion that is real, substantial, and on matters of significance.
- The employee still has the actual authority to interpret, validate, or override AI outputs using judgment and discretion, instead of just monitoring the output.
- Job descriptions need to be updated to accurately reflect the current tasks and authorities.
The rapid pace of AI advancement might require more frequent reviews of these factors for exempt employees. HR professionals might not know specifically how exempt employees are, or will be, using AI.
Key to remember: Employers must ensure that exempt employees meet certain duties tests, which could be undermined by the use of AI. This might mean that audits can be called for.




















































