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Professional Employee Exemption

May 5, 2023

This blog post provides information on the exemption from minimum wage laws and overtime pay provided by the Fair Labor Standards Act (FLSA) and California law as applied to professional employees.

State and federal law requires that most employees in the United States be paid at least the minimum wage for all hours worked and paid overtime at not less than time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek - or 8 hours a day or 40 hours a week for California employees.

However, the FLSA and California law provide an exemption from both minimum wage and overtime pay for employees employed as bona fide professional employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary or fee basis at a specific rate. Job titles do not determine exempt status. In order for an exemption to apply, an employee’s job duties and salary must meet all the requirements.

The specific requirements for exemption as a bona fide professional employee are summarized below. There are two general types of exempt professional employees: learned professionals and creative professionals.

California Professional Employee Exemption Requirements

State law uses two different tests to determine if an employee is an exempt professional. The worker must pass both of them to be labeled as a professional. The two tests are the salary test, and the job duties test.

The salary test means that a worker is only a professional if they makes a salary, and makes one at a specific level. Professionals that get paid on an hourly basis, and not with a minimum salary, typically are not exempt employees.

The specific salary that a professional must make to pass this test is a monthly salary equivalent to “no less than two times the state minimum wage for full-time employment.”

“Full-time employment” is working 40 hours per week, and using 2023 minimum wage figures, the minimum salary for an exempt professional employee is approximately $5,373 per month, or about $64,480 per year.

Federal law defines a “professional” in much the same way as California law. When there are differences in the two sets of laws, California employers are supposed to apply the set that provides the employee with the most protection.

Learned Professional Exemption

To qualify for the learned professional employee exemption, all of the following tests must be met:

  • The employee must be compensated on a fee or salary basis for 2023 at a rate not less than $684 per week (under FLSA) or $5,373 per month, or about $64,480 per year (under California law);
  • The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
  • The advanced knowledge must be in a field of science or learning; and
  • The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

Exempt means that the professional worker does not enjoy the benefits that these laws provide, such as extra pay for working overtime.

Primary Duty Test

“Primary duty” means the principal, main, major or most important duty that the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.

Work Requiring Advanced Knowledge

“Work requiring advanced knowledge” means work which is predominantly intellectual in character, and which includes work requiring the consistent exercise of discretion and judgment. Professional work is therefore distinguished from work requiring only the general knowledge acquired from routine mental, manual, mechanical or physical work. A professional employee generally uses the advanced knowledge acquired to analyze, interpret or make deductions from varying facts or circumstances. This knowledge generally cannot be attained at the high school level.

Field of Science or Learning

Fields of science or learning include law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, various types of physical, chemical and biological sciences, pharmacy and other occupations that have a recognized professional status and are distinguishable from the mechanical arts or skilled trades where the knowledge could be of a fairly advanced type, but is not in a field of science or learning.

Customarily Acquired by a Prolonged Course of Specialized Intellectual Instruction

The learned professional exemption is restricted to professions where specialized academic training is a standard prerequisite for entrance into the profession. The best evidence of meeting this requirement is having the appropriate academic degree.

However, the word “customarily” means the exemption may be available to employees in such professions who have substantially the same knowledge level and perform substantially the same work as the degreed employees, but who attained the advanced knowledge through a combination of work experience and mental instruction.

This exemption does not apply to occupations in which the majority of employees acquire their skill by experience rather than by advanced specialized intellectual instruction.

Under California law, para-professionals do not qualify under the professional exemption. These include professions such as nurses, physician assistants, or paralegals.

Creative Professional Exemption

To qualify for the creative professional employee exemption, all of the following tests must be met:

  • The employee must be compensated on a fee or salary basis for 2023 at a rate not less than $684 per week (under FLSA) or $5,373 per month, or about $64,480 per year (under California law); and
  • The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

The requisite duties that a worker must perform to be labeled a professional are similar to those described under California law.

Invention, Imagination, Originality or Talent

This requirement distinguishes the creative professions from work that primarily depends on intelligence, diligence and accuracy. Exemption as a creative professional depends on the extent of the invention, imagination, originality or talent exercised by the employee.

Whether the exemption applies, therefore, must be determined on a case-by-case basis. The requirements are generally met by actors, musicians, composers, soloists, certain painters, writers, cartoonists, essayists, novelists, and others as set forth in the regulations.

For example, journalists may satisfy the duties requirements for the creative professional exemption if their primary duty is work requiring invention, imagination, originality or talent. Journalists are not exempt creative professionals if they only collect, organize and record information that is routine or already public, or if they do not contribute a unique interpretation or analysis to a news product.

Recognized Field of Artistic or Creative Endeavor

This includes fields such as, for example, music, writing, acting and the graphic arts. Classifying your employees based on the learned professional exemption requires careful consideration, especially for positions in the same or similar job function.

Teachers

Teachers are exempt if their primary duty is teaching, tutoring, instructing or lecturing in the activity of imparting knowledge, and if they are employed and engaged in this activity as a teacher in an educational establishment.

Exempt teachers include, but are not limited to, regular academic teachers; kindergarten or nursery school teachers; teachers of gifted or disabled children; teachers of skilled and semi-skilled trades and occupations; teachers engaged in automobile driving instruction; aircraft flight instructors; home economics teachers; and vocal or instrument music teachers.

The salary and salary basis requirements do not apply to bona fide teachers. Having a primary duty of teaching, tutoring, instructing or lecturing in the activity of imparting knowledge includes, by its very nature, exercising discretion and judgment.

Practice of Law or Medicine

An employee holding a valid license or certificate permitting the practice of law or medicine is exempt if the employee is actually engaged in such a practice. An employee who holds the requisite academic degree for the general practice of medicine is also exempt if he or she is engaged in an internship or resident program for the profession. The salary and salary basis requirements do not apply to bona fide practitioners of law or medicine.

Exempt Employees Under Federal Law

Other roles that meet the learned professional exemption under the FLSA often include:

  • Executive chefs with specialized academic degrees
  • Certified athletic trainers
  • Licensed funeral directors and embalmers
  • Certified public accountants
  • Legal Assistants

Note that workers of professional status are not the only type of workers exempt from receiving overtime pay and minimum hourly wage.

Employment Lawyer

A non exempt employee who is wrongly classified as exempt can sue their employer for unpaid overtime and minimum wages. The employee can receive overtime pay and can also sue for interest and attorney’s fees and litigation costs.

Do you need help determining your exempt or nonexempt status? Contact us at Freeburg & Granieri, APC, today!

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