Exempt vs. Nonexempt

The decision on whether a job is exempt or nonexempt is determined by a series of tests contained in the Fair Labor Standards Act of 1938 (FLSA). The FLSA establishes minimum wage, overtime pay, child labor standards and record keeping procedures. This Act applies to employees in both the public and private sectors. The FLSA was most recently amended August, 2004.

The most widely recognized provision of the FLSA is overtime pay. Eligibility for overtime pay is specifically what the exempt/nonexempt test is designed to address. Employers are not required by law to pay overtime to exempt jobs but are required to pay overtime for nonexempt jobs. TCU is required to pay overtime pay at a rate of 1.5 times an employee’s regular hourly rate after an employee works 40 hours during one workweek. The Human Resources Department evaluates new positions and jobs requesting a change from nonexempt to exempt status.

The generic definitions for exempt jobs are:

Executive• Must be paid $455 per week on a salary basis.
• Primary duty is management of the enterprise or a customarily recognized department or subdivision.
• Must customarily and regularly direct the work of two or more other employees.
• Must have authority to hire or fire or executive’s suggestions and recommendations as to hiring, firing, promotion, or “changes in employment status” must be given particular weight.
Administrative• Must be paid $455 per week on a salary basis.
• Primary duty is performance of office or nonmanual work directly related to the management or general business operations of the employer or the employer’s customers.
Professional• Must be paid $455 per week on a salary basis (except for doctors, lawyers and teachers).
• Primary duty must be performance of work requiring advanced knowledge in field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction.
Computer Professional• Must be paid $455 per week on a salary basis or at least $27.63 per hour.
• Primary duty must be the design, development, documentation, analysis, creation or modification of computer systems, software, or machine operating systems.
Highly Compensated Employee• Total annual compensation of $100,000, of which at least $455 per week ($23,660 annually) is paid on a salary basis.
• Must perform office or non-manual work.
• Must customarily and regularly perform any one or more of the duties identified in the tests for executive, administrative or professional exemptions.

The Department of Labor can come and audit any position considered by the university to be exempt. For this reason extreme care is taken when conducting an exempt/nonexempt review. When a job is sufficiently questionable in its status, the Act recommends keeping the status of the job at the nonexempt level.