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Publications - Classification Issuances - Issuance #4

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Human Resources Division
Program Development and Classification Policy Branch

FAIR LABOR STANDARDS ACT -
MAKING COVERAGE DETERMINATIONS

I. INTRODUCTION

This issuance outlines the Human Resources Division's procedures with regard to making determinations of an employee's exempt or nonexempt status under the Fair Labor Standards Act (FLSA).

Summary of the Fair Labor Standards Act

The FLSA entitles certain employees to overtime pay under the provisions of the Act; these employees are "nonexempt" from coverage of the FLSA. However, in accordance with the Act, certain employees or groups of employees are "exempt" from the provisions of the Act, which means that these employees are not entitled to overtime pay, but rather some other form of compensation for working beyond their tour-of-duty, working unusual hours, or working under abnormal working conditions (for example, work at night, on Sunday, on a holiday, beyond their basic 8-hour tour-of-duty, or under certain hazardous conditions). In general, there are four basic categories which, if they are found to apply to certain positions, "exempt" employees from coverage under the Act. These categories include:

the executive exemption,
the administrative exemption,
the professional exemption, and
the foreign exemption.

These four types of exemptions pertain only to GS-5 and above employees; any employee properly classified at the GS-4 or below level is covered (i.e., "nonexempt") by the Act.

FLSA Provisions

FLSA regulations, found in 5, Code of Federal Regulations (CFR), 551, describe the minimum standards for both wages and overtime entitlement and the administrative procedures on compensating time worked. The FLSA overtime rate is time and one-half for all overtime hours worked unless the position is exempt. FLSA exempt employees are limited to receiving overtime up to the GS-10 Step 1 level.

II. REFERENCES

"The Fair Labor Standards Act ... provides for minimum standards for both wages and overtime entitlement, and delineates administrative procedures by which covered worktime must be compensated." Title 5, CFR, 551.101 (a)

Personnel Bulletin No. 551-1, Fair Labor Standards Act Policy and Procedure (http://www.usda.gov/da/employ/apsd/pb5511.htm), Office of Human Resources Management, USDA, October 28, 1999

III. COVERAGE

These procedures apply to making determinations of coverage under the FLSA for all employees in the mission area except those employees which the FLSA specifically does not cover. Among the persons the FLSA does not cover are the following which are pertinent to the mission area (reference: Title 5, CFR, 551.103 (b)):

a person appointed under appropriate authority without compensation (i.e., collaborators); and,
a volunteer.

IV. PROCEDURES FLSA

Exempt Versus Nonexempt

The determination of exempt versus nonexempt status is the result of a close collaboration between a position's supervisor and the classifier in the original designation and in any claim proceedings. Classifiers should discuss the FLSA determination and impact with the position's supervisor to assure an understanding of the impact of working overtime and related premium pay issues on an employee's entitlement to appropriate compensation.

Since the determination of an employee's coverage under FLSA rests largely on the content of the position description, incorrect determinations of FLSA coverage may result from inaccurate position descriptions. The designation of a position as FLSA exempt or nonexempt ultimately depends on the duties actually performed by an employee and the amount of time spent accomplishing those duties. Consequently, supervisors must assure that duties and responsibilities are adequately defined in position descriptions and classifiers must assure that position descriptions contain sufficient information on which to base FLSA coverage determinations. Further, in order to assure that initial FLSA determinations remain accurate, supervisors must assign work to employees consistent with position descriptions or contact the classifier to discuss the impact of changed duties on the ongoing accuracy of position descriptions and FLSA coverage determinations.

Unless the classifier can substantiate that the FLSA exemption criteria applies to the duties, the position must be considered nonexempt. An exempt employee may file an FLSA claim at any time to challenge the correctness of the exemption status determination. (See procedures for filing a claim in Attachment 4 (http://www.opm.gov/flsa/how.asp). In responding to requests for information/documentation related to an employee's claim with the USDA, Office of Human Resources Management, or OPM, mission area Human Resources Offices will forward their response through the Program Development and Classification Policy Branch, HRD.

FLSA Exemption Criteria

In order to be FLSA exempt, the duties performed by an employee must meet the executive, administrative, professional, foreign and/or special exemptions/exclusions criteria (for a copy of exemption criteria, Attachment 2, please contact Burt McKitrick on 202-690-4822.) These categories are not mutually exclusive; failure to meet the criteria for exemption under one category does not preclude exemption under another category.

Classifiers should not base determinations on criteria not included in 5 CFR 551. For example, FLSA coverage determinations are not to be based on arbitrators' decisions that do not reference OPM regulations, or Department of Labor rulings based on private sector situations.

For cases in which the FLSA determination is not obvious or, in the judgment of the Classifier, requires a detailed rationale for the record, the FLSA Worksheet (see Attachment 1 (PDF; 9Kb) is to be completed and attached to the official copy of the position description.

Making Determinations of Coverage Under FLSA

A detailed summary of the FLSA exemption criteria is located on the Internet at www.opm.gov/flsa/index.htm. (Reference FLSA Fact Sheets for Federal Employees, Coverage Fact Sheet MSO-98-1; and OPM's FLSA regulations as published in 5 CFR 551.)

Attachment 2 (a reproduction of OPM's FLSA training material) is a work aid containing regulatory language pertaining to FLSA coverage determinations and step-by-step instructions for making FLSA coverage determinations.

Personnel Bulletin 551-1, Fair Labor Standards Act Policy and Procedure (located on the Internet at http://www.usda.gov/da/employ/apsd/pb5511.htm) documents the Department's FLSA coverage determinations and accountability policy and claims procedures. In paragraph II.A.(1)(d) of the Bulletin, the Department indicates that individual exemption determinations should be in writing and easily retrievable if questions arise which need further explanation. The FLSA Worksheet, contained in Attachment 1 of this Issuance, is the mission area's method for documenting FLSA coverage determinations.

Examples of Exempted Positions in the Mission Area

Executive Exemption:

Any mission area position, above the GS-6 level, that exercises, as a minimum, duties typical of a supervisor, such as planning and assigning work, evaluating work performance, providing advice and counsel to employees on both administrative and work matters, interviewing candidates, recommending and/or making appointment selections, hearing and resolving complaints from employees, effecting minor disciplinary measures, identifying developmental and training needs of employees, developing performance standards for employees, and recommending and/or making performance ratings. (Reference factor level 3-2 of the General Schedule Supervisory Guide for threshold supervisory duties.)

For the executive exemption to apply to GS-5 and GS-6 positions, the employee must spend at least 80% of his/her work on supervisory matters. (Reference the 80% test in 5 CFR 551.205(b).)

Example:

Supervisory Agricultural Commodity Grader (Grain), GS-1980-11

Administrative Exemption: Any mission area position, above the GS-6 level, that exercises duties that significantly affect the formulation or execution of management policies or programs; or, involve general management or business functions, or supporting services of substantial importance to the organization serviced; or, involve substantial participation in the executive or administrative functions of a management official. In addition, the employee performs office or other non-manual work which is specialized or technical in nature that requires considerable specialized training, experience, and knowledge; and, the employee frequently exercises discretion and independent judgment.
For the administrative exemption to apply to GS-5 and GS-6 positions, the employee must spend at least 80% of his/her work on administrative matters as described above. (Reference the 80% test in 5 CFR 551.206(d).)

Example:

Agricultural Marketing Specialist (Agreements and Orders), GS-1146-13, whose paramount knowledges and grade-controlling functions concern the Agricultural Marketing Agreement Act and conducting studies to determine the extent to which the program is accomplishing the goals and objectives of the Act and making recommendations to management on needed changes in the technical aspects of program operations.

Professional Exemption:

Any mission area position, above the GS-6 level, that exercises duties that requiring a bachelor's degree or higher in a scientific field, or work in a recognized field of artistic endeavor, or theoretical application of highly-specialized knowledge in computer systems analysis, programming, and software engineering.

For the professional exemption to apply to GS-5 and GS-6 positions, the employee must spend at least 80% of his/her work on professional functions and work that is an essential part of those functions. (Reference the 80% test in 5 CFR 551.207(d).)

Examples:

Chemist, GS-1320-11
Architect, GS-808-13
Veterinary Medical Officer, GS-701-9

Foreign Exemption:

Any mission area position, regardless of grade level, that is permanently stationed in an "exempt area," and performs no hours of work in a workweek in a nonexempt area. An "exempt area" is defined as any foreign country or U.S. Territory other than the following: a state of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Outer Continental Shelf Lands, American Samoa, Guam, Midway Atoll, Wake Island, Johnston Island, and Palmyra. (Reference definition of exempt area in 5 CFR 551.104)

Example:

Any employee stationed in an exempt area (as defined above) above and who works no hours in a workweek in other than an exempt area.

V. POINTS OF CONTACT

Questions regarding the interpretation and application of FLSA regulations and coverage determinations should be directed to the appropriate staff member in the Program Development and Classification Policy Branch.

Questions regarding pay issues related to FLSA determinations should be directed to the appropriate staff member in the Employment Policy Branch.

MaryLynn Horst
Director
Human Resources Division