What is a FLSA Exemption Flow Chart?
The FLSA Exemption Flow Chart is a visual tool used by HR professionals and managers to determine whether an employee is exempt or non-exempt under the Fair Labor Standards Act (FLSA). This chart simplifies the classification process by guiding you through critical questions regarding salary levels, salary basis, and job duties. It is particularly useful during employee onboarding, job evaluations, or any time there is uncertainty about an employee’s classification. By using this chart, you can ensure compliance with labor laws while effectively managing your workforce.
Template
Below is a template you can customize for your organization’s needs:
FLSA Exemption Flow Chart
- Start
- Does the employee earn at least $684 per week ($35,568 annually)?
- Yes: Proceed to Step 2
- No: Non-Exempt (Employee is entitled to overtime pay)
- Salary Basis Test
- Is the employee paid on a salary basis (not hourly regardless of hours worked)?
- Yes: Proceed to Step 3
- No: Non-Exempt (Employee is entitled to overtime pay)
- Job Duties Test
- Executive
- Primary duty is managing the enterprise or a department.
- Directs the work of two or more full-time employees.
- Has the authority to hire/fire or significant influence in such decisions.
- Yes: Exempt under Executive
- No: Proceed to next category.
- Administrative
- Primary duty is performing office or non-manual work related to management or business operations.
- Exercises discretion and independent judgment in significant matters.
- Yes: Exempt under Administrative
- No: Proceed to next category.
- Professional
- Learned Professional: Requires advanced knowledge in a field of science or learning acquired through prolonged education.
- Creative Professional: Requires invention, imagination, originality, or talent in a recognized artistic or creative field.
- Yes: Exempt under Professional
- No: Proceed to next category.
- Computer Employee
- Engages in systems analysis, programming, or software engineering.
- Paid either $684 per week or $27.63 per hour.
- Yes: Exempt under Computer Employee
- No: Proceed to next category.
- Outside Sales
- Primary duty is making sales or obtaining orders.
- Regularly works away from the employer’s business.
- Yes: Exempt under Outside Sales
- No: Proceed to next category.
- Exemption Determined
- If none of the job duties apply, the employee is Non-Exempt and is entitled to overtime pay.
Purpose and Benefits
The primary purpose of the FLSA Exemption Flow Chart is to provide a straightforward method for assessing whether an employee is entitled to overtime pay. Using this tool can enhance your compliance with labor regulations and foster fair treatment within your organization.
- Streamlined Process: The flow chart simplifies the classification process, making it easy to determine an employee’s exemption status quickly.
- Compliance Assurance: By following the flow chart, you can ensure that your organization adheres to FLSA regulations, reducing the risk of legal issues.
- Employee Clarity: Clear classification helps employees understand their rights regarding overtime and salary expectations, leading to higher job satisfaction.
- Reduced Liability: Proper classification minimizes the risk of costly back pay claims or lawsuits related to misclassification.
Essential Components
To effectively utilize the FLSA Exemption Flow Chart, consider including the following essential components:
- Salary Level Criteria: A clear statement of the minimum salary threshold that must be met for exemption consideration.
- Salary Basis Requirements: Definitions to clarify what it means to be paid on a salary basis versus an hourly basis.
- Job Duties Descriptions: Detailed descriptions for each exemption category to guide the evaluation process.
- Decision Points: Clear yes/no paths to facilitate easy navigation through the flow chart.
How to Use This Form
Using the FLSA Exemption Flow Chart effectively involves a series of practical steps:
- Gather Employee Information: Collect necessary data about the employee’s salary and job duties before starting the flow chart.
- Follow the Steps Sequentially: Proceed through each question in order, ensuring that you answer accurately for a reliable classification.
- Document Findings: Keep a record of the decisions made during the classification process to maintain transparency and support future audits.
- Review Regularly: As job roles evolve, revisit the flow chart to ensure continued compliance and accurate classification.
Legal and Compliance Considerations
It’s essential to understand that misclassifying employees can lead to significant legal and financial repercussions. Employers may face penalties, back pay claims for overtime, and damage to their reputation. Regular training and audits are key to maintaining compliance with FLSA regulations.
Best Practices
To maximize the effectiveness of the FLSA Exemption Flow Chart, consider the following best practices:
- Engage in Ongoing Training: Regularly update HR staff and managers on FLSA regulations to prevent misclassification.
- Consult Legal Experts: When in doubt, seek legal advice to clarify exemption classifications and ensure compliance with state and federal laws.
- Utilize Technology: Consider using HR software that includes FLSA compliance tools to streamline the classification process.
