I get asked all the time to help with Fair Labor Standards Act (FLSA) classifications. In most organizations, compensation is responsible for reviewing job descriptions and determining whether a role is exempt or non-exempt. The question I hear referenced most often in those conversations is:

Does the job exercise independent judgment on matters of significance?

That’s an important question—and yes, it plays a role in FLSA determinations—but it doesn’t tell the whole story. In reality, the Department of Labor (DOL) relies on a three-part test to determine exemption status: salary level, salary basis, and job duties. Employers should be evaluating all three, not just answering the questions, but also documenting how they arrived at the classification decision.

The Three FLSA Tests
Salary Level Test
To even be considered for exempt status, an employee must earn at least the minimum salary set by the DOL—currently $684 per week.

Salary Basis Test
The employee must receive a predetermined, fixed salary that is not reduced based on the quality or quantity of work performed.

Duties Test
The employee’s primary job duties must fall into one of the exemption categories defined by the FLSA—most commonly executive, administrative, or professional.

Common Duties Test Categories
Executive Exemption
The primary duty is managing the organization or a department, regularly directing two or more employees, and having authority to hire or fire (or make recommendations that carry real weight).

Administrative Exemption
The primary duty involves office or non-manual work related to management or general business operations, including exercising discretion and independent judgment on significant matters.

Professional Exemption
The primary duty requires advanced knowledge in a field of science or learning (such as teachers, lawyers, or doctors) or specialized skills in creative professions.

If a job does not meet all three tests—salary level, salary basis, and duties—it is non-exempt, meaning the employee must be paid hourly and is eligible for overtime.

Why This Matters
Misclassifying employees can get expensive—fast. Employers may face back pay for unpaid overtime, liquidated damages (often doubling the back wages), and civil penalties ranging from $1,000 to more than $25,000 per willful violation. In some cases, liability can extend to unpaid taxes, benefits, and even criminal penalties. And to make things more complicated, some states impose even steeper penalties than federal law.

Taking the time to properly review and document your FLSA classifications now can save you thousands—or even millions—down the road.

​If you need help evaluating your roles or documenting your exemption decisions, feel free to reach out. I’m happy to help.