No, under federal labor law, an employee's position must be classified as either exempt or nonexempt; it cannot be both simultaneously for the same job or employee. The Fair Labor Standards Act (FLSA) mandates a clear distinction, requiring that an employee be designated one or the other.
Understanding Exempt and Nonexempt Classifications
The distinction between exempt and nonexempt status is crucial because it dictates whether an employee is eligible for minimum wage and overtime pay protections under the FLSA.
- Nonexempt employees are covered by FLSA provisions, meaning they must be paid at least the federal minimum wage and receive overtime pay (1.5 times their regular rate) for all hours worked over 40 in a workweek. Most employees are nonexempt.
- Exempt employees are "exempt" from these FLSA minimum wage and overtime requirements. To qualify as exempt, an employee's job duties and salary must meet specific criteria outlined by the Department of Labor (DOL).
The "Primary Duty" Rule for Mixed Roles
Even if an employee performs a variety of tasks that could seemingly fall into both categories, the law requires a single, definitive classification. When an employee performs a blend of duties—some potentially exempt, others clearly nonexempt—an employer must consolidate all of their job responsibilities. The determination of whether the position is exempt or nonexempt then hinges on identifying the employee's primary duty.
The primary duty is generally defined as the principal, main, or most important duty that the employee performs. This is determined based on all the facts in a particular case, with the emphasis often placed on the character of the employee’s job as a whole.
How Exempt Status is Determined
For a position to be classified as exempt, it generally must satisfy three key tests:
- Salary Basis Test: The employee must be paid a predetermined and fixed salary that does not change based on the quality or quantity of work performed.
- Salary Level Test: The salary paid must meet a minimum weekly threshold set by the DOL (e.g., for most federal exemptions, this is currently \$684 per week, or \$35,568 annually, as of 2023).
- Duties Test: The employee's primary job duties must fall within one of the specific exemption categories defined by the FLSA, such as:
- Executive Exemption: Involves managing the enterprise or a recognized department/subdivision, directing the work of two or more employees, and having the authority to hire or fire.
- Administrative Exemption: Pertains to office or non-manual work directly related to the management or general business operations of the employer or its customers, and requiring the exercise of discretion and independent judgment.
- Professional Exemption: Applies to work requiring advanced knowledge, usually acquired through a prolonged course of specialized intellectual instruction (e.g., doctors, lawyers, teachers), or creative artistic endeavors.
- Outside Sales Exemption: Applies to employees whose primary duty is making sales or obtaining orders outside of the employer’s place of business.
- Computer Employee Exemption: Applies to certain computer systems analysts, programmers, and software engineers.
- Highly Compensated Employee (HCE) Exemption: For employees who earn a higher total annual compensation and perform office or non-manual work, and whose primary duty includes performing at least one of the exempt duties.
Practical Insights for Employers
Employers must carefully analyze each position to ensure correct classification. Misclassification can lead to significant penalties, including back pay for unpaid overtime, fines, and legal fees.
- Review Job Descriptions: Ensure job descriptions accurately reflect the actual duties performed by employees.
- Focus on Primary Duty: For employees with varied tasks, identify the core function and most important responsibilities.
- Regular Audits: Periodically review classifications, especially when job roles evolve or new positions are created.
- Consult Resources: Utilize resources from the U.S. Department of Labor (DOL) for detailed guidance on FLSA exemptions.
| Feature | Exempt Employees | Nonexempt Employees |
|---|---|---|
| Overtime Pay | Generally ineligible for overtime pay | Eligible for 1.5x pay for hours over 40 per week |
| Minimum Wage | Not subject to federal or state minimum wage rules | Must be paid at least federal and state minimum wage |
| Salary | Must meet specific salary level and be paid on a salary basis | Can be paid hourly, salary, or other methods |
| Duties | Primary duties must meet specific exemption tests | Primary duties do not meet specific exemption tests |
| Time Tracking | Not typically required for payroll | Required to track all hours worked for pay and overtime |
In summary, despite the complexity of modern job roles, the law requires a singular classification for each employee under the FLSA. The primary duty test is essential in determining whether a role is exempt or nonexempt when an individual performs a mix of duties.
