The University of Tennessee, Knoxville

Tennessee County Municipal Advisory Service

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Exempt White-Collar Employees

Reference Number: MTAS-920
Tennessee Code Annotated
Reviewed Date: July 25, 2017
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The Executive, Administrative, Professional and Computer Employees Exemptions

In addition to certain elected, appointed, and volunteer employees not covered by the FLSA, other employees are exempt from the minimum wage and overtime provisions of the act. Like non-covered workers, exempt employees are covered by the Equal Pay Act provisions, but unlike non-covered employees they are still covered by FLSA record keeping requirements.

The exemptions we are concerned with relate to executive, administrative, professional and computer employees, and are otherwise known as the “white collar or EAP exemptions.” The exemptions are based on the specific job description and duties of the employee involved.

On May 16, 2016, the U.S. Department of Labor issued final regulations revising Section 13(a)(1) (the white-collar exemption) and Section 13(a)(17) (computer employee exemption) of the Fair Labor Standards Act. 29 C.F.R. Part 541. The new rules expands the number of workers eligible for overtime by nearly doubling the salary threshold.The regulations also contain new definitions regarding which employees must be paid a minimum wage and premium overtime wages when they work more than 40 hours in a work week.

29 C.F.R. § 541.0 of the Fair Labor Standards Act provides “an exemption from the act’s minimum wage and overtime requirements for any employee employed in a bona fide executive, administrative, or professional capacity.” 29 C.F.R. § 541.400 provides “a possible exemption from the minimum wage and overtime requirements for computer system analysts, computer programmers, software engineers, and other similarly skilled computer employees.”

The rules provide three standards to be met for the exemption to apply:

  • The employee must be paid a pre-determined and fixed salary that is not subject to reductions because of variations in the quality or quantity of work performed (the “salary basis test” as defined in 29 C.F.R. § 541.602)
  • The amount of salary paid must meet minimum specified amounts (the “salary level test” as determined in 29 C.F.R. § 541.600) 
  • The employee’s job duties must primarily involve executive, administrative or professional duties (the “duties tests”) as determined in 29 C.F.R. § 541.700