What Does Salary Exempt Mean?

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Under federal law, an employee must be paid the legal minimum wage, and an overtime rate of 1 1/2 times her normal salary when she works over 40 hours per week. Under some conditions, an employee may be exempt from these salary requirements, but you cannot simply change an employee's pay plan from a per hour pay rate to a fixed salary per week and be in compliance with the law.

Executive Exemption

An employee does not have to be paid a per-hour rate and overtime pay if she qualifies as an executive with the company. To qualify, she must be paid a minimum of $455 per week as of 2011, and must be responsible for managing the business or a certain department. She must also direct the work of at least two other full-time employees, and she must also be responsible for personnel decisions such as hiring or firing employees, or must have substantial input into these matters.

Administrative Exemption

If an employee does not qualify under the executive exemption, she may qualify as an administrative employee. The employee must still be paid more than $455 per week, but she does not have to have the substantial authority that an executive must. The employee must still need to use discretion and independent judgment on important company matters, and must perform office or other nonmanual labor to qualify. Blue-collar workers are not exempt from overtime and minimum wage laws. A blue-collar worker typically works with her hands, using energy and skill.

Professional Exemption

A professional with advanced knowledge in science or learning may be exempt from overtime and minimum-wage laws. Their expertise is generally acquired through a specific, prolonged course of study, such as a college degree in their field. They must perform work that requires that knowledge and is primarily intellectual in nature, and must be responsible for exercising discretion and judgment regularly in their job. They must also be paid at least $455 per week in salary. A creative professional is exempt if their job requires imagination and talent in an artistic or creative field, without meeting the other requirements.

Other Exemptions

An employee may be exempt as a computer employee if they meet the salary requirements and use their skills to design and implement computer systems or software on a regular basis. Outside salespeople are exempt from minimum wage and overtime if their primary job focus is to secure orders for products or services that will be paid for by a customer. Salespeople must also perform the majority of their job away from the employer's place of business. An employee making over $100,000 per year may be exempt as long as their base salary is at least $455 per week, and they perform one of the tasks that an administrative or executive professional employee performs.

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