The "Administrative Exemption"

To be covered under the "administrative exemption", the employee must be paid a salary of at least $455.00 per week and his/her primary duty is the performance of office or non-manual work directly related to the management of the business or to the general business operations of the employer or its customers and his/her primary duty includes the exercise of discretion and independent judgment with respects to matters of significance. 29 C.F.R. § 541.200 et seq. This is the most common exemption claimed by employers.

Work directly related to management or general business operations includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; legal and regulatory compliance; and similar activities. 29 C.F.R. §541.202.

Employees who actually perform the production or sales work of the business are not administratively exempt. For example, a company which sells concert and sporting event tickets over the telephone or the internet will have employees who answer the phones and process the tickets sales, as well as different employees who process the payroll for the company, handle human resource issues, order supplies, rent office space, etc. The employees who actually deal with the customers and sell the tickets are engaged in the actual business of the employer - sale of tickets. They are therefore not administratively exempt. The employees who provide the support services for the business (payroll, human resources, etc.) may be administratively exempt. As the determination as to whether an employee meets an exemption is highly fact specific, you should consult experienced overtime and minimum wage attorneys, such as those of Billips & Benjamin LLP as soon as you think you may have a claim.

To qualify for the administrative exemption, an employee's primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. The term "matters of significance" refers to the level of importance or consequence of the work performed. 29 C.F.R. §541.202.

The exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources. The exercise of discretion and independent judgment also does not include clerical or secretarial work, recording or tabulating data, or performing other mechanical, repetitive, recurrent or routine work. An employee who simply tabulates data is not exempt, even if labeled as a "statistician." 29 C.F.R. §541.202. » Back to top