The Federal Fair Labor Standards Act ("FLSA") contains provisions and standards concerning minimum wages, equal pay, which employees are exempt and not exempt from payment of overtime pay, record-keeping and child labor. The FLSA is administered by the U.S. Department of Labor's Wage-and-Hour Division ("DOL").95 New York State and Connecticut also have wage hour laws that generally follow the FLSA but contain a few additional and distinct wage hour protections aside from those prescribed by the FLSA. Thus, because most New York and Connecticut employers are subject to both federal and state wage-and-hour laws, it is important to understand that when there is a conflict between state law and the FLSA, or the FLSA and other law, the law more favorable to the employee applies. Therefore, if an employer is subject to both the FLSA and state wage-and-hour laws, it may not ignore either one just because its wage-and-hour practices are exempt from, or in compliance with, the other.
An employer is covered under the FLSA if it engages in interstate commerce and has greater than $500,000 in annual gross sales or business. Hospitals, in-patient care facilities and schools are covered as well. If an employer is not covered under the FLSA, then only state wage and hour law (New York or Connecticut) will apply.
Certain employees are exempt from some of the provisions of either or both the FLSA and the New York and Connecticut wage-and-hour laws. The most important consequence of this classification is that employers are not required to pay overtime to exempt employees.
The tests to determine whether an employee is "exempt" are detailed and often confusing. The following discussion of how to determine whether an employee is exempt must therefore be considered an overview and not an exhaustive treatment of this subject. In general, any employee who is paid on an hourly basis should be non-exempt, and exempt employees should be paid a salary not dependent on the number of hours worked. However, under both the FLSA and state laws, the mere fact that an employee is paid on a salary basis and has a certain title will not ensure that the employee will be considered "exempt."
Exemptions are applicable only to employees employed in a bona fide executive, outside sales, administrative, or professional capacity and do not include employees who are merely training to become employed in such a capacity and who are not actually performing the duties of an executive, outside sales, administrative, or professional employee.96 In addition, certain computer employees may also be exempt.
The determinative factors are whether the duties, responsibilities and salary of the employee comply with the applicable federal and/or state requirements. Exemptions are very narrowly construed by the courts and it is the employer who bears the burden of proving that an employee has been properly classified as exempt.
The New York regulations contain a single test. Although the New York regulations are patterned after the federal standards for an employee to be deemed exempt.
As discussed below, the Connecticut regulations outline a multi-part test for determining exemption for executive, professional, administrative, or outside salesmen employees. The test for each exemption varies, but essentially mimics the respective federal test for that exemption.
(1) Federal Law
An employee who is paid at least $455 per week on a salary basis (exclusive of board, lodging and other facilities) is exempt as an "executive" if:
1 he or she regularly directs the work of at least two or more other employees; and
2 his or her primary duty (generally 50 percent or more of the time) is management of the enterprise, or of a recognized department or subdivision thereof.
3 he or she has the authority to hire or fire other employees or whose suggestions or recommendations as to hiring, firing, advancement, promotions, or any other change of status of other employees are given particular weight. 97
The DOL has provided specific examples of duties it considers to be "exempt" or managerial in nature when performed by an employee in managing a department or supervising other employees. In addition, the DOL has supplied several examples of work that it would consider "non-exempt." These examples are contained in Appendix N..
(2) New York Law
An exempt "executive" employee under New York law is defined, like under Federal law, as an employee:
(a) whose primary duty consists of the management of the enterprise in which such individual is employed or of a customarily recognized department or subdivision thereof;
(b) who customarily and regularly directs the work of two or more other employees therein;
(c) who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring and firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight and;
(d) who customarily and regularly exercises discretionary powers.98
(3) Connecticut Law
An employee employed in a bona fide executive capacity is one who is paid a salary of at least $400 per week, exclusive of board, lodging, or other facilities, and whose primary duty consists of management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof, and includes the customary and regular direction of two or more employees; or:
(a) whose primary duty consists of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof; and
(b) who customarily and regularly directs the work of two or more other employees therein; and
(c) who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; and
(d) who customarily and regularly exercise discretionary powers; and
(e) who does not devote more than twenty percent, or, in the case of an employee of a retail or service establishment who does not devote as much as forty percent, of his hours of work in the workweek to activities which are not directly and closely related to the performance of the work described in subdivisions (1) through (4) inclusive, of this section; provided this subdivision shall not apply in the case of an employee who owns at least twenty percent interest in the enterprise in which he is employed; and
(f) who is compensated for his services on a salary basis not less than $375 per week exclusive of board, lodging, or other facilities.99
A separate test exists for employees training for a bona fide executive position.100
(1) Federal Law
Employees earning at least $455 per week on a salary basis (exclusive of board, lodging, or other facilities) will be exempt under the "administrative" exemption if:
1 their primary duty (generally 50 percent or more of the time) consists of responsible office or non-manual work directly related to management policies or general business operations; and
2 such primary duty includes work requiring the exercise of discretion and independent judgment.
As with the executive exemption, employees earning less than $250 per week must satisfy stricter criteria to qualify for the administrative exemption.101
(2) New York Law
An exempt "administrative" employee is defined as an employee:
(a) whose primary duty consists of the performance of office or non-manual field work directly related to management policies or general operations of such individual's employer;
(b) who customarily and regularly exercises discretion and independent judgment; and
(c) who regularly and directly assists an employer, or an employee employed in a bona fide executive or administrative capacity (e.g., employment as an administrative assistant); or who performs, under only general supervision, work along specialized or technical lines requiring special training, experience or knowledge.
(3) Connecticut Law
An employee employed in a bona fide administrative capacity is one who is paid on a salary or fee basis at least $400 per week, exclusive of board, lodging, or other facilities, and whose primary duty consists of the performance of work described in subdivision (a) below, or:
(a) whose primary duty consists of either:
1) the performance of office or non-manual work directly related to management policies general business operations of the employer or the employer's customers, or
2) the performance of functions in the administration of a school system or educational establishment or institution, or of a department or subdivision thereof, in work directly related to the academic instruction or training carried on therein; and
(b) who customarily and regularly exercises discretion and independent judgment; and
(c) 1) who regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity, or 2) who performs under only general supervision work along specialized or technical lines requiring special training, experience or knowledge, or 3) who executes under only general supervision special assignments and tasks; and
(d) who does not devote more than 20 percent, or, in the case of an employee of a retail or service establishment who does not devote as much as forty percent, of hours worked in the workweek to activities which are not directly and closely related to the performance of the work described in subdivisions (1) to (3), inclusive, of this section; and
(e) 1) who is compensated for services on a salary or fee basis not less than $400 per week exclusive of board, lodging or other facilities, or 2) who, in the case of academic administrative personnel, is compensated for his services as required by subparagraph (1) of this subdivision or on a salary basis at least equal to the entrance salary for teachers in the school system or educational establishment or institution by which he is employed.102
(1) Federal Law
This exemption includes the learned, the artistic and the teaching professions. A professional employee earning at least $455 per week on a salary or fee basis must meet the following criteria to be exempt:
1 His or her primary duty (generally 50 percent or more of time) must be:
(a) to perform work requiring knowledge of an advanced type in a field of science or learning, customarily obtained by a prolonged course of specialized instruction and study; or
(b) to perform work that is original and creative in character in a recognized field of artistic endeavor and the result of which depends primarily on the employee's invention, imagination, or talent; or
(c) to teach, tutor, instruct or lecture in the activity of imparting knowledge and to be employed and engaged in this activity as a teacher certified or recognized as such in the school system or institution by which he or she is employed; and
2 he or she must perform work that is predominantly intellectual and varied (not routine) which cannot be standardized in point of time; and
3 he or she must consistently exercise discretion and judgment.103
(2) New York Law
An exempt "professional" employee is defined as an employee:
(a) whose primary duty consists of the performance of work: requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and an apprenticeship, and from training in the performance of routine mental, manual or physical processes; or original and creative in character in a recognized field of artistic endeavor (as distinguished from work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination or talent of the employee; and
(b) whose work requires the consistent exercise of discretion and judgment in its performance; or
(c) whose work is predominantly intellectual and varied in character (as opposed to routine mental, manual, mechanical or physical work) and is of such a character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.104
(3) Connecticut Law
An employee employed in a bona fide professional capacity is one who is paid on a salary or fee basis at least $400 per week, exclusive of board, lodging, or other facilities, and whose primary duty consists of the performance of work described in subdivision (a) below, or:
An employee who is the holder of a valid license or certificate permitting the practice of law or medicine or any of their branches and who is actually engaged in the practice thereof, or in the case of an employee who is the holder of the requisite academic degree for the general practice of medicine and is engaged in an internship of resident program pursuant to the practice of medicine or any of its branches, or in the case of an employee employed and engaged as a teacher as provided in subdivision (a)(3) below, or:
An employee:
(a) whose primary duty consists of the performance of: 1) work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual or physical processes or 2) work that is original and creative in character in a recognized field of artistic endeavor, as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training, and the result of which depends primarily on the invention, imagination or talent of the employee or 3) teaching, tutoring, instructing or lecturing in the activity of imparting knowledge while employed and engaged in this activity as a teacher certified or recognized as such in the school system or educational establishment or institution by which he is employed; and
(b) whose work requires the consistent exercise of discretion and judgment in its performance; and
(c) whose work is predominantly intellectual and varied in character, as opposed to routine mental, manual, mechanical or physical work, and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.105
Computer systems
analysts, computer programmers, software engineers or other similarly skilled
workers in the computer field earning at least $455 per week on a salary basis
(exclusive of board, lodging, or other facilities) are eligible for exemption as
professionals. Because job titles vary widely and change quickly in the computer
industry, job titles are not determinative of the applicability of this
exemption.
(a) The section 13(a)(1) exemption applies to any computer employee compensated
on a salary or fee basis at a rate of not less than $ 455 per week, exclusive of
board, lodging or other facilities, and the section 13(a)(17) exemption applies
to any computer employee compensated on an hourly basis at a rate not less than
$ 27.63 an hour. In addition, under either section 13(a)(1) or section 13(a)(17)
of the Act, the exemptions apply only to computer employees whose primary duty
consists of:
(1) The application of systems analysis techniques and procedures, including
consulting with users, to determine hardware, software or system functional
specifications;
(2) The design, development, documentation, analysis, creation, testing or
modification of computer systems or programs, including prototypes, based on and
related to user or system design specifications;
(3) The design, documentation, testing, creation or modification of computer
programs related to machine operating systems; or
(4) A combination of the aforementioned duties, the performance of which
requires the same level of skills.106
e. Other Exemptions
(1) Federal Law
The FLSA also provides exemptions for "outside salesmen" from the FLSA's overtime requirements.
(2) New York Law
Also note that although "outside salesmen" are exempt under New York and federal law, the federal and New York regulations have differing definitions of outside salesmen. For example, telemarketers who work either at their employer's facility or from their homes are not outside salesmen within the meaning of the New York regulations because they are deemed to work at a fixed site.107
(3) Connecticut Law
Connecticut provides exceptions to its minimum and overtime wage law to a designated list of occupations including drivers, seamen, certain radio or television personnel, bona fide executive, administrative or professional employees, outside salesmen, certain inside salesmen, taxicab drivers, household delivery route salesmen, auto salesmen, agriculture employees, police and firemen, beer delivery drivers, and mechanics.108
96 C.F.R. § 541.100
98 .http://www.labor.state.ny.us/faq.html #wh5
99 Conn. Agencies Regs. § 31-60-14
102 Conn. Agencies Regs. § 30-60-15.
104 29 C.F.R. § 541.1, 541.2 & 541.3 (federal tests); 12 N.Y.C.R.R. § 142-2.16 (state test).
105 Conn. Agencies Regs. § 31-60-16.
107 NY Lab. Law § 651.5(d).
107 Conn. Gen. Stat. § 31-76i.