Rules for Exempting People from Overtime - Adminstrative Exemption
Last week on our weekly newsletter, we talked about the Executive Exemption to the salary compensation for overtime rules. As a reminder, I listed the exemptions to paying someone overtime below.
Executive Exemption
Administrative Exemption
Professional Exemption
Computer Exemption
Outside Sales Exemption
Highly Compensated Exemption
This week we're going to talk about the administrative exemption for overtime. To qualify for this exemption, all the following rules must be met.
The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $684* per week; starting January 1, 2020. It is $455 now.
The employee’s 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
The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
So if you have a secretary and all they do is run your calendar or answer phone calls. They're probably not exercising the discretion or independent judgments required under this rule.
So very important rules. You have to follow all these rules before you make somebody exempt from overtime due to an administrative exemption. To me, the biggest one is they have to exercise discretion and independent judgment with matters of significance.
So just a quick rundown on the rules to make your employees exempt from overtime due to the administrative exception. Thank you for your time and remember to be great every day.
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