The University of Tennessee, Knoxville

Tennessee County Municipal Advisory Service

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Administrative Exemption

Reference Number: MTAS-932
Tennessee Code Annotated
Reviewed Date: July 25, 2017
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(NOTE: The U.S. District Court for the Eastern District of Texas issued a preliminary injunction preventing the implementation of the revised FLSA overtime regulations. The case was brought by 21 states. The Obama Administration appealed the decision to the U.S. Court of Appeals for the Fifth Circuit. The 5th Circuit Court of Appeals granted a motion of the Trump Administration for an additional 60 days to determine its position on the appeal of the ruling by the District Court enjoining the FLSA overtime regulation. The Administration's decision was initially due by May 1st, 2017. The 5th Circuit granted another extension until June 30th.  The Labor Department filed a brief with the Fifth Circuit Court of Appeals indicating that it will not defend the $913 salary rate and asked the Court to clarify its ability to set a salary level.  The department has also issued a request for public comments.  Until we hear more, continue to comply with the old salary level testing regulations.)

Employees who meet the four criteria below are bona fide administrative employees under DOL’s revised exemption regulations. If any of the questions below are answered in the negative, the employee is not exempt as an administrative employee unless he/she is highly compensated.

  • Is the employee paid a minimum of $455 per week exclusive of board, lodging or other facilities? (Effective December 1, 2016, the new salary minimum is $913 per week.)
  • Is the employee paid on a salary basis? With certain limited exceptions he or she must:
    • Experience no reduction in salary for variations in the quality and quantity of work;
    • Experience no deduction for partial-day absences; and
    • Receives each pay period a pre-determined amount constituting all or part of his or her compensation; or
    • Pay deductions are based on the principle of public accountability. 29 C.F.R. § 541.602.
  • Does the employee’s “primary duty” consist of performing office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers?
    • The primary duty means the principle, main, major or most important duty that the employee performs.
    • The employee should not be a “blue-collar” worker or a “production worker” (except if the organization’s business is producing management services or other business operations for clients, then a production worker may be exempt). 29 C.F.R. § 541.201.
  • Does the employee have a primary duty that includes the exercise of discretion and independent judgment with respect to matters of significance?
    • Exercising “discretion and independent judgment” involves comparing and evaluating possible courses of conduct and acting or making a decision after the various possibilities have been considered.
    • Use of manuals and standard operating procedures does not preclude exemption if the manuals contain or relate to highly technical, scientific, legal, financial or other similarly complex matters that can be understood or interpreted only by those with advanced or specialized knowledge or skills. 29 C.F.R. § 541.202.