How do I determine if my customer service employee is exempt or non-exempt?

Your customer service employee may be exempt if they meet certain Federal Labor Standards Act (FSLA) and state-specific criteria.

Determining Exempt vs. Non-Exempt

Whether an employee is exempt or non-exempt, according to FSLA, is determined by the following three things:

• Their compensation
• The type of work the employee does
• Their specific duties

Customer Service Employee

There are several categories of exempt employees:

• Executive
• Administrative
• Professional
• Computer Professional
• Outside sales
• Highly Compensated

Under the Fair Labor Standards Act, a customer service representative could be considered an administrative employee and qualify for exemption if they satisfy all three of the following:

• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee's primary duty must be the performance of office or non-manual work, and it must be directly related to the management or general business operations of the employer or the employer's customers; and
• The employee's primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

So, if a customer service representative primarily deals with the management of the employer's customers and has to exercise independent judgment in these dealings, they could be classified as exempt. However, if your customer service employees currently make less than $455 weekly, they wouldn't be exempt.

State Laws

In addition to the federal law, you will also want to make sure you check your state's laws as they can sometimes be more rigorous. For instance, Connecticut sets their salary basis at $475.00 per week, $20 higher than the federal salary test. California also sets their salary threshold a bit higher than the federal salary test. In order to qualify for exemption, an administrative employee must earn a monthly salary that equates to at least two times the state minimum wage, and this is based on a 40-hour workweek. Additionally, the administrative employee must meet certain criteria to be classified as exempt in California, and these are more detailed than the federal requirements.

FLSA Final Rule

On November 22, 2016, a federal court put a hold on the Department of Labor's increase to the minimum salary requirement for the Executive, Administrative, and Professional exemption under the Fair Labor Standards Act, which was scheduled to take effect on December 1, 2016. This is currently pending legal action.

Final Tip

Determining whether or not your employee qualifies as exempt should be looked at on a case by case basis, and the employee must fulfill all necessary criteria in order to be classified as exempt. Even if your employee is compensated at a higher rate than the minimum salary requirement, they still need to meet specific duties tests.

Helpful Links:

FLSA Overtime Security Advisor - DOL.gov

Overtime Laws, US Department of Labor - DOL.gov

DOL's Final Rule - DOL.gov

Exempt vs. non-exempt