Executive Employee | Practical Law

Executive Employee | Practical Law

Executive Employee

Executive Employee

Practical Law Glossary Item 1-507-4702 (Approx. 3 pages)

Glossary

Executive Employee

An employee classification under the Fair Labor Standards Act (FLSA) (and some state and local equivalents) that is exempt from minimum wage and overtime pay requirements (29 C.F.R. §§ 541.100 to 541.106).
To qualify for the executive exemption under the FLSA, each employee must satisfy the following:
  • The employee must be compensated:
    • on a salary basis; and
    • at a rate at least equal to the standard salary level of $844 a week, effective July 1, 2024 ($1,128 a week, effective January 1, 2025, with subsequent updates at three-year intervals starting July 1, 2027) ($684 a week before July 1, 2024) (special salary levels apply to US territories) (29 C.F.R. §§ 541.600 and 541.607).
  • The employee's primary duty must be managing the business or managing a customarily recognized department or subdivision of the business.
  • The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent.
  • The employee must have the authority to hire or fire other employees, or the employee's suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees must be given particular weight.
(29 C.F.R. §§ 541.100 to 541.106.)
On April 23, 2024, the DOL announced a final rule to increase the standard salary level for the executive, administrative, and professional (EAP) exemptions and the total annual compensation threshold for the highly compensated employee (HCE) exemption (89 Fed. Reg. 32842). The first of two incremental increases took effect July 1, 2024. The second is scheduled to take effect January 1, 2025, with subsequent updates at three-year intervals starting July 1, 2027. (29 C.F.R. §§ 541.600 and 541.607.) For more on the DOL's 2024 final rule, including prior rulemaking and pending legal challenges, see Minimum Salary for the Executive, Administrative, and Professional Exemptions Under the FLSA: DOL Rulemaking Tracker.
For more information on the exemption requirements for executive employees under the FLSA, see FLSA White Collar Exemptions Checklist: Executive Exemption.
State or local law may provide for the same or a similar exemption or may prohibit the exemption of executive employees. For more information on state wage and hour laws, see Wage and Hour Claims Toolkit: State-Specific Materials and Wage and Hour Laws: State Q&A Tool.