When many people think of an exempt employee, they think of someone who is paid on a salaried basis. In reality, being paid on a salary does not necessarily make you exempt from the Fair Labor Standards Act (FLSA). Each worker’s duties have to be carefully considered to determine whether the FLSA applies.
The law starts with the assumption that most people are non-exempt. In other words, the FLSA applies to them and they are entitled to the minimum wage and overtime premium. In order to be exempt, you have to meet a specific exemption to the law.
One area where this has been somewhat confusing for employers and employees alike is the financial services industry. These workers are almost always salaried or paid on a fee basis, but that does not necessarily mean they are exempt from the FLSA.
Many financial services industry employees do qualify for the administrative exemption to the FLSA. In order to qualify for the administrative exemption:
- The worker must be compensated on a salary or fee basis at a rate of no less than $684 per week AND
- The worker’s primary duty must be the performance of non-manual or office work directly related to the management or general business operations of the company or the company’s customers AND
- The worker’s primary duty must include the exercise of independent judgment and discretion with regard to matters of significance
Examples of financial services activities that probably qualify for the administrative exemption
- Collecting and analyzing information regarding customers’ income, assets, investments or debts
- Determining which financial products best meet the customer’s financial circumstances and needs
- Advising customers regarding the advantages and disadvantages of various financial products
- Marketing, servicing or promoting the employer’s financial products
It does not matter whether the worker’s activities are aimed at the ultimate consumer or an intermediary.
However, it is important to realize that simply selling financial products is not enough to qualify for the administrative exemption. This is because merely selling does not require the exercise of independent judgment and discretion with regard to matters of significance.
If you are concerned that your financial services workers could be misclassified as exempt, you should speak with an attorney right away. If they are misclassified, they could have claims for unpaid back wages and overtime against you. It is best to ensure that you have complied with the FLSA when classifying workers as exempt.