Today’s burning question: I am a city manager and I just read about an exception in the Fair Labor Standards Act that exempts anyone making over $100,000 per year from eligibility for overtime. In my assessment, our Battalion Chiefs and perhaps even our company officers meet all of the criteria to fall under the highly compensated exemption. Do you agree?
Answer: The highly compensated employee exception is indeed a recognized exception to the overtime requirements of the FLSA. However, the details of the exception would likely make it inapplicable to most of your line officers. The good news for you is that it may apply to some of your staff personnel (non-first responders) who make over $100k per year and otherwise meet the requirements of the law.
The highly compensated employee exemption comes from Section 13(a)(1) of the FLSA, often referred to as the “white collar exemptions.” 29 U.S. Code §213 (a) (1) excludes “any employee employed in a bona fide executive, administrative, or professional capacity” from the overtime requirements of the act.
The US Department of Labor has issued regulations that expound on the somewhat cryptic language of §213 (a) (1) as it relates to the three white collar categories: executive, administrative and professional. In doing so, the DOL created a fourth closely related exemption, the highly compensated employee exemption. The regulation for the highly compensates employee exemption is 29 CFR §541.601:
541.601 Highly compensated employees.
(a) An employee with total annual compensation of at least $100,000 is deemed exempt under section 13(a)(1) of the Act if the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee identified in subparts B, C or D of this part.
(c) A high level of compensation is a strong indicator of an employee’s exempt status, thus eliminating the need for a detailed analysis of the employee’s job duties. Thus, a highly compensated employee will qualify for exemption if the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee identified in subparts B, C or D of this part. An employee may qualify as a highly compensated executive employee, for example, if the employee customarily and regularly directs the work of two or more other employees, even though the employee does not meet all of the other requirements for the executive exemption under § 541.100.
(d) This section applies only to employees whose primary duty includes performing office or non-manual work. Thus, for example, non-management production-line workers and non-management employees in maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers, laborers and other employees who perform work involving repetitive operations with their hands, physical skill and energy are not exempt under this section no matter how highly paid they might be.
While Paragraph (c) seems to support your interpretation of the highly compensated employee exemption, you will notice that Paragraph (d)’s limitation to “non-manual labor” takes back much of what might otherwise be suggested by Paragraph (c). Responding to fires and emergencies is manual labor. It certainly cannot be considered “office work”.
In addition, the DOL has issued regulations specifically directed at the Section 13(a)(1) exemptions as applied to firefighters and police officers. Enacted in 2004, these regulations, commonly referred to as the First Responder Regulations, apply to firefighters “regardless of rank” whose primary duty is to respond to emergencies. The First Responder Regulations apply to all 13(a)(1) exemptions, namely: executive, administrative, professional and highly compensated employees.
(1) The section 13(a)(1) exemptions and the regulations in this part also do not apply to police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, investigators, inspectors, correctional officers, parole or probation officers, park rangers, fire fighters, paramedics, emergency medical technicians, ambulance personnel, rescue workers, hazardous materials workers and similar employees, regardless of rank or pay level, who perform work such as preventing, controlling or extinguishing fires of any type; rescuing fire, crime or accident victims; preventing or detecting crimes; conducting investigations or inspections for violations of law; performing surveillance; pursuing, restraining and apprehending suspects; detaining or supervising suspected and convicted criminals, including those on probation or parole; interviewing witnesses; interrogating and fingerprinting suspects; preparing investigative reports; or other similar work.
(2) Such employees do not qualify as exempt executive employees because their primary duty is not management of the enterprise in which the employee is employed or a customarily recognized department or subdivision thereof as required under § 541.100. Thus, for example, a police officer or fire fighter whose primary duty is to investigate crimes or fight fires is not exempt under section 13(a)(1) of the Act merely because the police officer or fire fighter also directs the work of other employees in the conduct of an investigation or fighting a fire.
(3) Such employees do not qualify as exempt administrative employees because their primary duty is not the performance of work directly related to the management or general business operations of the employer or the employer’s customers as required under §541.200.
(4) Such employees do not qualify as exempt professionals because their primary duty is not the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction or the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor as required under § 541.300. Although some police officers, fire fighters, paramedics, emergency medical technicians and similar employees have college degrees, a specialized academic degree is not a standard prerequisite for employment in such occupations.
Because the highly compensated employee exemption is a Section 13(a)(1) exemption, and because the First Responder Regulations apply to Section 13(a)(1) exemptions, your line officers likely will not qualify under the highly compensated employee exemption.
That leaves open the possibility that certain staff officers may fall within the definition of a highly compensated employee.
We discuss this and much more at our three-day program, FLSA For Fire Departments. Our next classes will be held: