Employees FAQ 16

In order for an employee to be considered exempt from the FLSA's overtime protections under the administrative exemption, the new FairPay regulations require that the employee "exercise discretion and independent judgment with respect to matters of significance." Are there any standards for helping an employer determine whether an employee satisfies this criteria?

The Department of Labor regulations set forth ten non-exclusive factors to help employers determine whether an employee exercises discretion and independent judgment with respect to matters of significance. These factors come from the prior regulations and factors that federal courts have found relevant in past cases determining whether an employee exercises discretion and independent judgment.  The employer should consider the following: Does the employee:

  • have authority to formulate, affect, interpret or implement management policies or operating practices;
  • carry out major assignments in conducting business operations;
  • perform work that affects business operations to a substantial degree, even if the employee's assignments are related to operations of a particular segment of the business;
  • have authority to commit the employer in matters that have significant financial impact;
  • have authority to waive or deviate from established policies or procedures without prior approval;
  • have authority to negotiate and bind the company on significant matters;
  • provide consultation or expert advice to management;
  • have involvement in planning long or short-term business objectives;
  • investigate and resolve matters of significance on management's behalf; and
  • represent the company in handling complaints, arbitrating disputes or resolving grievances.
29 C.F.R. sec. 541.202(b).