Duties Test

Business owners have a lot on their plate. From start-ups to large corporations, there are responsibilities that all employers must follow. One of these is classifying each employee as “exempt employees” or “non-exempt employees.” For most positions, this may seem fairly obvious. But for some other positions, categorizing them as exempt or non-exempt can be a challenge, especially for small to medium-sized businesses who have less experience in doing so. Still, employers need to take employee classification seriously. Not just to prevent legal consequences, but for the welfare of the employees. 

If you are an employer, one of the things that you may have to know is the duties test. 

What is the duties test? 

The duties test is one of two tests under the Fair Labor Standards Act (FLSA) that is used to determine employee classification as being “exempt” or “non-exempt.” The duties test is composed of guidelines that outline the type of work that is performed by an employee. 

The Fair Labor Standards Act (FLSA) is a federal law that aims to protect the rights of employees to fair wages (minimum wage and overtime) and other work practices. 

Why is it important? 

The duties test is essential because it helps determine whether an employee is exempt or non-exempt. This is significant because, according to the FLSA, if an employee is considered to be exempt, this means that their employer is not required to give them overtime pay. On the other hand, non-exempt employees are legally entitled to be paid for all overtime hours worked.

What are the different types of exempt employees?

According to the Fair Labor Standards Act (FLSA), the following are the main categories of exempt employees:

• Administrative
• Computer
• Executive
• Outside Sales
• Professional

Employers must be careful not to classify employees as exempt based on the job title alone. The specific job duties and salary that determine the exemption.

What are the job duties that are considered exempt?

Under the duties test, the following are the job duties that must be met to determine an employee to be exempt. 

1. Administrative 

• The employee must have a primary duty of doing office or non-manual work directly related to the management or general business operations.
• The employee’s duties include a level of discretion and independent judgment on significant matters.

1. Computer 

• The employee must work as a computer systems analyst, computer programmer, software engineer, or other similarly skilled workers in the computer field. 
• Their responsibilities must involve the application and/or design of computer programs or related systems. 

1. Executive 

• The employee’s primary duty must involve managing the business or a recognized department or subdivision. 
• The employee must direct the work of at least two or more other full-time employees or their equivalent.
• The employee must have the authority to hire, fire, and offer career advancement to other employees.

1. Outside Sales

• The employee’s primary duty must be making sales or obtaining orders/contracts for services paid by a client or a customer. 
• The employee’s work must be primarily conducted away from an employer’s place of business. 

1. Professional

• The employee’s job duties must require advanced knowledge in work that is intellectual. 
• The advanced knowledge must be in a field of science or learning.
• The advanced knowledge must have been acquired from a specialized course.

Are all jobs subject to the duties test? 

No, not all jobs are subject to the duties test. The FLSA exemptions apply only to white-collar employees whose wages are above a certain threshold. The minimum salary exemption is $684 on a fixed salary basis per week or $35,568 per year. This means that:

• If an employee earns more than $684 per week on a fixed salary basis or $35,568 per year, they may be exempted from overtime if they pass the duties test too. 
• If an employee earns less than $684 per week or $35,568 per year, they are entitled to overtime pay no matter what type of job responsibilities they have. There is no need for the Duties Test.
• These conditions on salary requirements are collectively known as the Wages Test or the Salary Test.

Keep in mind that exemptions also do not apply to police, firefighters, paramedics, and other first responders. 

Do some US states have their own duties test? 

Yes, some states have their own duties test. If the state exemption requirements differ from that of the FLSA, the general rule is that the employer must follow the law that provides the most protection for the employee. Meaning, the business must comply with the one that is more favorable to the employee.