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How Do You Qualify for the Administrative Employee Exemption?

 

In Part 1 of our series on understanding FLSA exemptions, we went over what an exempt employee is, what you can and cannot do to their pay, and why you may want to have an exempt employee. In Part 2, we are deep-diving into the administrative exemption.

To qualify for the administrative employee exemption, all of the following tests must be met:

  • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $634 per week (as of 2020).
  • The employee’s primary duty must be the performance of office or nonmanual work directly related to the management or general business operations of the employer or the employer’s customers, and
  • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. 

For those who operate educational establishments, the administrative exemption is also available to employees compensated on a salary or fee basis at a rate not less than $634 a week, or a salary basis which is at least equal to the insurance salary for teachers in the same educational establishment. This means that, if a teacher is paid less than $634 per week, an administrator does not have to make $634, but instead make the insurance salary of the teachers. Their primary duty of these employees is work related to academic operations and functions in an educational establishment.

Employees engaged in academic administrative functions include:

  • Superintendents or other heads of elementary or secondary school systems, and any assistants, responsible for the administration of such matters as curriculum, quality, and methods of instructing, measuring and testing the learning potential and achievement of students, establishing and maintaining academic and grading standards, and other aspects of the teaching program.
  • Principals and any vice-principals responsible for the operation of an elementary or secondary school.
  • Department heads in institutions of higher education responsible for the administration of the mathematics department, the English department, etc.
  • Academic counselors who perform work such as administering school testing programs, assisting students with academic problems, and advising students concerning degree requirements.
  • Other employees with similar responsibilities.

Jobs relating to building management and maintenance, jobs relating to the health of the students, and staff such as social workers, psychologists, lunchroom managers, or dietitians do not perform academic administrative functions.

In Part 3, we will be going into learned and creative professional exemptions.

About the author, Rhamy

Rhamy grew up watching and working with his mother and grandmother in the senior insurance market. This familiarity with the struggles faced by people trying to navigate the incredibly complicated and heavily regulated healthcare market led him to start Poplar Financial while working on his degree at the University of Memphis. After completing his MBA and Bachelors in Finance and Economics, Rhamy guided Poplar Financial through the disruptive opportunity that is the Affordable Care Act. Since then Poplar Financial has received numerous awards from major insurance carriers and has completed its fourth year in a row of doubling in size. Now his team focuses on the processes around human resources and specializes in providing companies with between 20 and 1000 employees with the payroll, benefits, and HR needs.

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