August 24, 2023
The Fair Labor Standards Act (FLSA) Exemption for
Executive, Administrative, and Professional Employees
The Fair Labor Standards Act (FLSA) establishes a federal
The FLSA considers an employee to be paid on a salary
minimum wage for most private and public sector
basis if the employee regularly receives a predetermined
employees and generally requires overtime compensation at
amount on a weekly or less frequent basis that is not subject
a rate of one and one-half times an employee’s regular
to reduction either because of variations in the quality or
hourly rate for hours worked beyond a forty-hour
quantity of the work performed or because of absences
workweek. While broadly providing these employment
occasioned by the employer or the operating requirements
protections to most employees, the FLSA also includes
of the business. DOL regulations provide that the EAP
exemptions for certain specified employees. Section
exemption may apply to administrative and professional
13(a)(1) of the FLSA, found at 29 U.S.C. § 213(a)(1),
employees compensated on a fee basis (i.e., the employee is
exempts from the statute’s minimum wage and overtime
paid an agreed sum for a single job regardless of the time
pay requirements bona fide executive, administrative, and
required for its completion).
professional (EAP) employees and authorizes the Secretary
of Labor to “define and delimit” this exemption through
Under DOL’s current regulations, an employee must be
regulations.
compensated on a salary basis (or fee basis where
permitted) at a rate of not less than $684 per week ($35,568
The Department of Labor (DOL) announced plans in its
annually) for the EAP exemption to apply. The weekly
2023 spring regulatory agenda to issue a proposed rule
salary rate is lower—$455 per week—for employees (other
concerning the agency’s implementation of the EAP
than those employed by the federal government) in the
exemption in August 2023. As the Secretary of Labor
Commonwealth of the Northern Mariana Islands, Guam,
considers revised regulations for the EAP exemption, this
Puerto Rico, or the U.S. Virgin Islands. The weekly salary
In Focus reviews the FLSA and examines DOL’s current
rate is $380 for employees (other than those employed by
regulations for EAP employees.
the federal government) in American Samoa.
Background
Salary Rules for Certain Occupations
Congress enacted the FLSA in 1938 to address and
The EAP exemption salary test does not apply to
eliminate labor conditions considered detrimental to
physicians, lawyers, teachers, and outside sales workers
maintaining “the minimum standard of living necessary for
who may be exempt if they satisfy other duty and credential
health, efficiency, and [the] general well-being of workers.”
requirements. Academic administrative personnel may be
The exemption for EAP employees reflected Congress’s
exempt if paid at a rate of not less than $684 per week or a
sense that these workers typically earn salaries well above
salary at least equal to the entrance salary for teachers in the
the minimum wage and generally enjoy other forms of
educational establishment at which they are employed.
compensation—such as above-average fringe benefits and
Employees in the motion picture producing industry need
better opportunities for advancement—that set them apart
not be paid on a salary basis so long as they are
from nonexempt employees entitled to overtime pay.
compensated at a base rate of at least $1,043 per week (or a
proportionate amount based on the number of days worked)
DOL first issued regulations to implement the EAP
and the duties test requirements (described below) are met.
exemption in 1938. These regulations identified job duties
that the employee had to perform to qualify for the
EAP Exemption Duties Test
exemption. DOL regulations issued in 1940 added a
In addition to satisfying the salary test, an employee must
minimum salary threshold for the exemption. Although the
perform specified duties to qualify for the EAP exemption.
salary and duty standards have changed over time, they
These duties vary based on whether an individual is an
continue to form the basis of the exemption. In general,
executive, administrative, or professional employee. DOL’s
under the current regulations, to be considered an exempt
current regulations identify the following duties for exempt
EAP employee, the employee must satisfy a salary test and
EAP employees:
a duties test. The regulations are codified in part 541 of
Title 29 of the Code of Federal Regulations.
Executive Employees
•
EAP Exemption Salary Test
The employee’s primary duty is “management of the
enterprise in which the employee is employed or of a
In general, to qualify for the EAP exemption under current
customarily recognized department or subdivision
regulations, an employee must (1) be paid on a salary basis
thereof.”
and (2) be paid a salary that is above an amount determined
by DOL regulations.
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link to page 2 The Fair Labor Standards Act (FLSA) Exemption for Executive, Administrative, and Professional Employees
• The employee “customarily and regularly directs the
employee’s time in nonexempt work, and a short test,
work of two or more other employees.”
which had a higher salary threshold but applied a less
•
stringent duties test that did not include a quantitative limit
The employee “has the authority to hire or fire other
on nonexempt work. The 2004 rule applied a single
employees or whose suggestions and recommendations
standard salary threshold ($455 per week), and created a
as to the hiring, firing, advancement, promotion or any
separate salary threshold and duties requirement for HCEs.
other change of status of other employees are given
particular weight.”
The 2016 rule maintained the standard duties test for the
Administrative Employees
EAP exemption. It raised the standard and HCE salary
•
thresholds to $913 per week and $134,004 per year,
The employee’s primary duty is “the performance of
respectively. However, DOL never enforced the rule.
office or non-manual work directly related to the
Before the rule could take effect, it was challenged in court,
management or general business operations of the
and the U.S. District Court for the Eastern District of Texas
employer or the employer’s customers.”
in Nevada v. U.S. Department of Labor blocked its
• The employee’s primary duty “includes the exercise of
implementation.
discretion and independent judgment with respect to
matters of significance.”
The 2019 final rule formally rescinded the 2016 final rule.
It also increased the salary threshold from $455 per week
Professional Employees
($23,660 annually) to $684 per week ($35,568 annually);
• The employee’s primary duty is “the performance of
increased the annual salary threshold for the HCE
work: (i) [r]equiring knowledge of an advanced type in a
exemption from $100,000 to $107,432; allowed up to 10%
field of science or learning customarily acquired by a
of the standard salary threshold to be comprised of
prolonged course of specialized intellectual instruction;
nondiscretionary bonuses, incentive payments, and
or (ii) [r]equiring invention, imagination, originality or
commissions; maintained the salary thresholds set by the
talent in a recognized field of artistic or creative
2004 rule for the U.S. territories; and increased the base rate
endeavor.”
level for employees in the motion picture producing
industry from $695 per week to $1,043 per week.
Highly Compensated Employees (HCEs)
Certain highly compensated EAP employees may be
Table 1. Summary of Salary Thresholds for EAP
exempt from the FLSA’s overtime pay requirement even if
Exemptions in the 2004, 2016, and 2019 Rules
they do not perform all of the duties identified above.

2004 Rule
2016 Rulea
Under DOL’s current regulations, an em

2019 Rule
ployee paid on a
salary basis with total annual compensation of at least
Standard
$455/week
$913/week
$684/week
$107,432 is exempted from the requirement if the employee
“customarily and regularly” performs any one or more of
HCE
$100,000
$134,004
$107,432
these duties. DOL maintains that a high level of
annually
annually
annually
compensation “is a strong indicator of an employee’s
U.S.
$455/week;
$913/week;
$455/week;
exempt status, thus eliminating the need for a detailed
Territories
American
American
American
analysis of the employee’s job duties.” The agency
Samoa
Samoa
Samoa
describes the phrase customarily and regularly to mean “a
$380/week
$767/week
$380/week
frequency that must be greater than occasional but which,
of course, may be less than constant.”
Motion Picture
Producing
$695/week
$1,397/week $1,043/week
Recent DOL Rulemaking
Industry
DOL has revised its regulations on the EAP exemption
Source: CRS analysis of U.S. Department of Labor, Wage and Hour
several times, and the agency has updated the EAP salary
Division, “Defining and Delimiting the Exemptions for Executive,
threshold nine times, most recently in 2019. The level at
Administrative, Professional, Outside Sales and Computer
which the salary threshold is drawn plays a decisive role in
Employees,” 81 Fed. Reg. 32,391 (May 23, 2016); and U.S.
determining the EAP exemption’s scope. All else equal, a
Department of Labor, Wage and Hour Division, “Defining and
lower salary threshold is associated with greater coverage
Delimiting the Exemptions for Executive, Administrative, Professional,
of the exemption and fewer employees who would be
Outside Sales and Computer Employees,” 84 Fed. Reg. 51,230 (Sept.
entitled to overtime pay. This section provides information
27, 2019).
on DOL rules that updated the salary threshold in 2004,
Notes:
2016, and 2019. Summary information is in Table 1.
a. The 2016 rule was finalized but did not become effective and
was eventual y invalidated. HCE = Highly compensated
The 2004 rule created a single standard duties test and a
employees.
single salary level for the EAP exemption. For several years
prior to the 2004 rule, DOL had employed a dual approach
to evaluating an employee’s EAP exemption status. In
Sarah A. Donovan, Specialist in Labor Policy
particular, DOL rules allowed for a long test, which paired
Jon O. Shimabukuro, Legislative Attorney
a lower salary threshold with quantitative limits on an
IF12480


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The Fair Labor Standards Act (FLSA) Exemption for Executive, Administrative, and Professional Employees


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