What does the term “exempt” employee mean under the FLSA?

The term “exempt” employee under the Fair Labor Standards Act (FLSA) refers to employees who are not entitled to receive minimum wage and overtime pay based on specific job duties and salary thresholds. Exempt employees are typically those who hold positions that are defined under the FLSA criteria, such as executive, administrative, professional, or outside sales roles.

These positions are characterized by responsibilities that involve decision-making authority, specialized knowledge, or managerial duties. As a result, exempt employees are expected to perform their job responsibilities without the entitlement to overtime pay when they work more than the standard 40 hours in a workweek. The determination of exempt status is primarily based on the nature of the work performed and the compensation structure, which must meet or exceed specified salary levels established by the law.

Understanding this definition is crucial for both employers and employees, as it impacts payroll practices and employee classification. Employers must properly classify employees to ensure compliance with the FLSA and to avoid potential legal issues related to wage and hour violations.