FLSA Overview

The Fair Labor Standards Act (FLSA) is the United States’ federal wage and hour law, administered by the US Department of Labor (DOL). Among other things, it establishes the federal minimum wage and sets overtime pay requirements for employees.

The FLSA determines whether a position is eligible for overtime pay. An “exempt” position is not eligible for overtime pay. A “non-exempt” position is eligible and must receive overtime pay at time-and-one-half for any hours worked above 40 hours in one workweek. Three Tests: Salary Basis, Duties and Salary Level

Three Tests: Salary Basis, Duties, and Salary Level

A position may be considered exempt under the FLSA if it meets three tests.

1. Employee must be paid on a salary basis, not an hourly basis
2. Duties must meet criteria for executive, professional, administrative, computer or outside sales activities
3. Compensation rate must be at least $35,568 annually, regardless of full-time or part-time appointment.

If any one of the three tests is not met, the employee must be classified as non-exempt and eligible for overtime pay. Please note that exempt classification is an option, not a requirement under the law. A position that meets all three tests may still be classified as non-exempt.