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November 18, 2010
Key Factors in Determining the Executive Exemption

In a BLR webinar entitled "Overtime: Legal Strategies for Whittling Down Your Payouts Without Breaking the Law," Harold (Hal) M. Brody, Esq., partner, and Fredric C. Leffler, Esq., Senior Counsel in the Labor and Employment Law Department of Proskauer Rose LLP described the key factors in determining who's really entitled to overtime.

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  • There are three major exemptions: Executive, Administrative and Professional
  • Take into account the duties test plus the Salary Basis test
  • The employee's title and being paid a salary are not determinative, yet many employers still get this wrong

An exempt Executive employee is one who:

  • Meets the Salary Basis test
  • Manages the enterprise or a customarily recognized department or subdivision
  • Customarily and regularly directs the work of at least two or more other employees
  • Has the authority to hire or fire other employees or whose suggestions and recommendations will be given particular weight; and
  • Exercises discretion and independent judgment with respect to matters of significance
  • Concurrent performance of exempt and non-exempt work:
    • Will not disqualify the employee from the executive exemption if the employee otherwise meets the salary and duties requirements (29 C.F.R. Sec. 541.106)
    • However, an employee who primarily performs non-exempt work, but occasionally fills in as relief manager will not become exempt as a result of those sporadic periods spent managing
  • There is not as much litigation under this exemption as others, but be alert to the "primarily engaged" issue for working managers

Harold (Hal) M. Brody, Esq. is a partner in the Labor & Employment Law Department with Proskauer Rose LLP (www.proskauer.com). His practice is characterized by its diversity and he has represented employers in virtually every facet of labor and employment law. Fredric C. Leffler, Esq. is a Senior Counsel in the Labor & Employment Law Department and co-head of the Employment Law Counseling and Training Group. He represents major private and not-for-profit employers in all aspects of labor and employment law.

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