The DOL’s Fact Sheet #17C explains the standards for exemption for overtime pay for “executive, administrative and professional” employees:
- The employee must be compensated on a salary or fee basis (as defined in the regs) at a rate not less than $455 per week.
- 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.
- The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
The phrase “primary duty” is crucial, so the DOL gives some precision to its meaning in that fact sheet. It means: “the principal, main, major or most important duty that the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.”
Similarly, the phrase “directly related to the management or general business operations” means, among other things, that the work must be “directly related to assisting with the running or servicing of the business, as distinguished, for example from working on a manufacturing production line or selling a product in a retail or service establishment.”
The DOL offers the following examples of jobs that would fall under the exemption: “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.”
More key definitions are given in Fact Sheet #17C, including what it means to exercise discretion and independent judgment. Also, a broader explanation of other categories of employees exempt from overtime pay, including “certain skilled computer professionals,” are given on this page of the DOL’s website. Your accounting professional or legal counsel can provide more precise definitions as they pertain to your organization.