FLSA Exempt Test: The Ultimate Guide – HR 101

by | Published on May 28, 2023 | Last Updated on Sep 11, 2023 | Academy, Compensation

Top Compensation Providers

The freshest salary benchmarking data by industry, location, and revenue size.

FLSA Exempt Test Image

Understanding the Fair Labor Standards Act (FLSA)

In the complex landscape of labor laws, the Fair Labor Standards Act (FLSA) is one of the pivotal statutes. Established to provide a baseline of protections for workers, the FLSA outlines criteria for minimum wage, overtime pay, and child labor. A crucial aspect of the FLSA is its definition and categorization of exempt employees and non-exempt employees.

The distinction between these two categories often hinges on the FLSA exempt test, a series of three tests that determine whether an employee is subject to or exempt from the Act’s requirements for minimum wage and overtime pay. Employees who are exempt are not eligible for overtime, even if they work more than 40 hours per week.

Try our FLSA Audit Tool – Analyze all of your employees at once, and automatically determine exempt status for each.

Our FLSA Audit software offers exemption-by-exemption analysis to help your company comply with wage and hour laws. We use our proprietary job technology to provide a thorough report for each employee, assessing their exempt and non-exempt status. This tool can save valuable time and money and is highly recommended for business owners and HR professionals.

Job Description Review

What is the FLSA Exempt Test?

The FLSA exempt test, also known as the duties test, is an evaluation tool used to determine if an employee is exempt from the minimum wage and overtime provisions of the FLSA. This test assesses three primary factors:

Salary Basis Test

This test determines whether the employee is paid a predetermined and fixed salary that is not subject to reductions due to variations in the quality or quantity of work performed.

Salary Level Test

This test evaluates whether the employee’s salary meets a minimum specified amount, currently set by the Department of Labor. Pay structures are essential in determining how employees are compensated and their alignment with the Fair Labor Standards Act (FLSA) regulations.

Related: Which company has the best compensation market data?

Duties Test

This test scrutinizes the employee’s job duties to ascertain if they primarily involve executive, administrative, professional, computer, or outside sales activities. The nature of the job duties, rather than the job title, is paramount in this evaluation.

All three tests must be satisfied for an employee to qualify for an exemption.

OfficialLogo White

Bundle our FLSA Audit Software with a Compensation Survey and Save Big!

Understanding the Duties Test

The duties test, arguably the most complicated and nuanced aspect of the FLSA exempt test, closely examines an employee’s primary duty, which refers to the principal, main, major, or most important duties that the employee performs.

An employee’s primary duty includes the consideration of factors such as the relative importance of the exempt duties in relation to the non-exempt duties, the amount of time spent performing exempt work, the employee’s relative freedom from direct supervision, and the relationship between the employee’s salary and the wages paid to other employees for the same kind of non-exempt work.

The test also differentiates between various types of exempt duties.

Executive Duties

Executive duties include the supervision of at least two full time employees and the power to hire, fire, or promote those employees.

Administrative Duties

Administrative duties, on the other hand, are duties directly related to the management or general business operations of the employer or the employer’s clients.

Professional Duties

Professional duties require advanced knowledge in a field of science or learning, advanced knowledge typically gained through a prolonged course of specialized instruction.

Computer Duties – Computer Systems Analyst – Computer Programs

Computer duties involve work as a computer systems analyst, computer programmer, software engineer, or similar roles involving the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs.

Outside Sales Duties

Outside sales duties include making sales or obtaining orders for services or contracts for services, where the employee is customarily and regularly engaged away from the employer’s place of business.

FLSA Exemptions: An Overview

Specific professions are inherently exempt under FLSA guidelines. For instance, those employed as a computer systems analyst, computer programmer, or software engineer may qualify for the computer employee exemption if they satisfy the salary and duties tests. Similarly, sales employees who are primarily engaged in outside sales are generally exempt.

However, just because an employee fits a particular job title does not mean they are necessarily exempt. The FLSA is more concerned with the duties performed by the employee rather than the job title or how the employee is paid.

Moreover, highly compensated employees—those who earn more than a specified amount per year, including commissions, bonuses, and other incentive payments—are also generally exempt, provided they perform at least one of the duties of an exempt executive, administrative, or professional employee.

FLSA Exempt Analysis and Key Factors

The FLSA exempt analysis is a careful review of an employee’s compensation, primary duties, and the extent of their discretion and independent judgment in performing those duties.

For example, the employee’s primary duty must involve the kind of work related to the company’s operations that is deemed significant. This requirement ensures that an employee, such as a software engineer or computer systems analyst, who performs high-level work that significantly affects the company’s operations, could qualify for exemption.

In terms of discretion and independent judgment, the FLSA duties test often requires that the employee exercise these in matters of significance. This requirement pertains to the comparison and evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered.

Let’s Take a Look at an Example

Her is a hypothetical situation involving a computer systems analyst, one of the categories that can potentially qualify for an FLSA exemption.

Employee Background:

Elizabeth Smith is employed as a Computer Systems Analyst at Friendly Tech Corp. her job duties include coordinating and implementing computer system programs, troubleshooting system issues, and liaising with software engineers to ensure efficient system operations. She is paid a salary of $70,000 per year.

FLSA Exemption Test Application:

Salary Basis Test: Elizabeth is paid on a salaried basis, meaning she receives a predetermined amount each pay period irrespective of the quantity or quality of work. Her pay isn’t reduced if she produces less work or if her work is of lesser quality. Therefore, Elizabeth meets the salary basis test.

Salary Level Test: The standard salary level set by the Department of Labor for most exempt employees is $684 per week or $35,568 per year. Since Elizabeth’s annual salary is $70,000, which is well above the standard salary level, she satisfies this requirement too.

Duties Test: Here, we look at the nature of Elizabeth’s job duties:

Elizabeth’s primary duties involve designing, testing, and implementing computer systems and programs, which fall under the computer employee exemption’s description.

She consistently uses her advanced knowledge in computer science and systems analysis to troubleshoot and resolve complex issues.

Elizabeth frequently exercises discretion and independent judgment in her role, especially when deciding the best solutions for software or hardware problems.

Consequently, Elizabeth also meets the criteria for the duties test.

Based on the above, all three tests for the FLSA exemption — the salary basis test, the salary level test, and the duties test — are satisfied. Thus, Elizabeth, as a Computer Systems Analyst at Friendly Tech Corp, can be classified as an exempt employee under the FLSA.

Employee Rights and Employer Responsibilities

It’s important for both employees and employers to understand these criteria and how they affect an individual’s status as exempt or non-exempt. Employers have a responsibility to accurately classify their employees, while employees have a right to fair compensation as outlined by the law.

Additionally, employees who believe they are incorrectly classified or not receiving proper wages can file a complaint with the Department of Labor. It’s critical to note that while blue-collar workers, manual laborers, and other workers who perform work involving repetitive operations with their hands, physical skill, and energy are generally entitled to minimum wage and overtime pay, FLSA protections do not extend to every worker.


In conclusion, the FLSA exempt test and subsequent analysis serve as crucial tools for determining an employee’s status, whether exempt or non-exempt. By considering factors like salary, primary responsibilities, and the exercise of discretion and independent judgment, these tests ensure the appropriate application of labor standards as outlined by the FLSA. Through their proper use, employees and employers alike can understand, apply, and uphold the principles of fair labor practices.