EAP exemptions, standing for Executive, Administrative, and Professional, refer to specific categories of employees who are typically not subject to the Fair Labor Standards Act's (FLSA) minimum wage and overtime pay requirements. This means employers are generally not required to pay them at least the federal minimum wage or an overtime premium for hours worked beyond 40 in a workweek, provided they meet specific criteria related to their salary and job duties.
The Department of Labor (DOL) first established regulations in 1938 to implement these EAP exemptions. These regulations were crucial in defining the specific job duties an employee had to perform to qualify for these exemptions.
Understanding EAP Exemptions
The concept of EAP exemptions stems from the premise that certain higher-level employees, who typically exercise independent judgment and discretion, are not subject to the same protections as hourly or non-exempt employees.
What are EAP Exempt Employees Exempt From?
The primary exemptions for EAP employees under the FLSA relate to:
- Minimum Wage: They are not guaranteed to earn the federal minimum wage for all hours worked.
- Overtime Pay: They are not entitled to receive one-and-a-half times their regular rate of pay for hours worked over 40 in a workweek.
Qualifying for EAP Exemptions: The Key Tests
For an employee to be properly classified as exempt under the EAP categories, they must generally satisfy three key tests:
1. Salary Basis Test
The employee must be paid on a salary basis, meaning they receive a predetermined, fixed salary that does not vary with the quality or quantity of work performed. Subject to certain exceptions, the employee must receive their full salary for any week in which they perform any work, without deductions for absences caused by the employer or the operating requirements of the business.
2. Salary Level Test
The employee's salary must meet a minimum specified amount. As of recent updates, the standard salary level for most EAP exemptions is \$684 per week (equivalent to \$35,568 per year). This threshold is subject to change based on federal regulations.
3. Duties Test
The employee's primary job duties must fit the criteria for one of the specific exemption categories: Executive, Administrative, or Professional. This is where the historical DOL regulations identifying specific job duties come into play.
A. Executive Exemption
To qualify for the executive exemption, an employee's primary duty must involve:
- Managing the enterprise, or a customarily recognized department or subdivision thereof.
- Customarily and regularly directing the work of two or more other employees.
- Having the authority to hire or fire other employees, or having their suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees given particular weight.
Examples: Store managers, department heads, chief operating officers.
B. Administrative Exemption
For the administrative exemption, the primary duty must be:
- Performing office or non-manual work directly related to the management or general business operations of the employer or the employer's customers.
- Exercising discretion and independent judgment with respect to matters of significance.
Examples: HR managers, executive assistants with significant discretionary authority, financial analysts, purchasing agents.
C. Professional Exemption
The professional exemption is divided into two main types:
-
Learned Professional: The primary duty must involve work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction (e.g., a degree). This advanced knowledge must be predominantly intellectual in character and involve the consistent exercise of discretion and judgment.
Examples: Lawyers, doctors, teachers, engineers, accountants, scientists.
-
Creative Professional: The primary duty must involve work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.
Examples: Musicians, writers, actors, graphic designers (whose work is primarily artistic), cartoonists.
Summary of EAP Exemption Criteria
The table below provides a concise overview of the general requirements for EAP exemptions:
| Exemption Type | Primary Duty | Salary Basis | Salary Level (as of recent updates) |
|---|---|---|---|
| Executive | Management of the enterprise; directing 2+ employees; hiring/firing authority. | Yes | ≥ \$684 per week |
| Administrative | Office/non-manual work related to management/business ops; discretion/judgment. | Yes | ≥ \$684 per week |
| Professional | Advanced knowledge in a specialized field OR invention/imagination in creative field. | Yes | ≥ \$684 per week |
For more detailed information on employee classification and FLSA exemptions, consult the U.S. Department of Labor.
Practical Considerations for Employers and Employees
- For Employers: Correctly classifying employees as exempt or non-exempt is critical. Misclassification can lead to significant penalties, including back pay for unpaid minimum wages and overtime, liquidated damages, and civil penalties. Employers must regularly review job duties and compensation to ensure compliance with current FLSA regulations.
- For Employees: Understanding whether you are exempt or non-exempt helps you know your rights regarding minimum wage and overtime. If you believe you are misclassified, you may be able to file a complaint with the Department of Labor.
