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ESA Final Rule

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees; Final Rule [04/23/2004]

Regulations

[PDF Version]

Volume 69, Number 79, Page 22260-22274

[[Page 22260]] 

For the reasons set forth above, 29 CFR part 541 is revised to read as 
follows:

PART 541--DEFINING AND DELIMITING THE EXEMPTIONS FOR EXECUTIVE, 
ADMINISTRATIVE, PROFESSIONAL, COMPUTER AND OUTSIDE SALES EMPLOYEES

Subpart A--General Regulations
Sec.
541.0 Introductory statement.
541.1 Terms used in regulations.
541.2 Job titles insufficient.
541.3 Scope of the section 13(a)(1) exemptions.
541.4 Other laws and collective bargaining agreements.
Subpart B--Executive Employees
541.100 General rule for executive employees.
541.101 Business owner.
541.102 Management.
541.103 Department or subdivision.
541.104 Two or more other employees.
541.105 Particular weight.
541.106 Concurrent duties.
Subpart C--Administrative Employees
541.200 General rule for administrative employees.
541.201 Directly related to management or general business 
operations.
541.202 Discretion and independent judgment.
541.203 Administrative exemption examples.
541.204 Educational establishments.
Subpart D--Professional Employees
541.300 General rule for professional employees.
541.301 Learned professionals.
541.302 Creative professionals.
541.303 Teachers.
541.304 Practice of law or medicine.
Subpart E--Computer Employees
541.400 General rule for computer employees.
541.401 Computer manufacture and repair.
541.402 Executive and administrative computer employees.
Subpart F--Outside Sales Employees
541.500 General rule for outside sales employees.
541.501 Making sales or obtaining orders.
541.502 Away from employer's place of business.
541.503 Promotion work.
541.504 Drivers who sell.
Subpart G--Salary Requirements
541.600 Amount of salary required.
541.601 Highly compensated employees.
541.602 Salary basis.
541.603 Effect of improper deductions from salary.
541.604 Minimum guarantee plus extras.
541.605 Fee basis.
541.606 Board, lodging or other facilities.
Subpart H--Definitions And Miscellaneous Provisions
541.700 Primary duty.
541.701 Customarily and regularly.
541.702 Exempt and nonexempt work.
541.703 Directly and closely related.
541.704 Use of manuals.
541.705 Trainees.
541.706 Emergencies.
541.707 Occasional tasks.
541.708 Combination exemptions.
541.709 Motion picture producing industry.
541.710 Employees of public agencies.

    Authority: 29 U.S.C. 213; Public Law 101-583, 104 Stat. 2871; 
Reorganization Plan No. 6 of 1950 (3 CFR 1945-53 Comp. p. 1004); 
Secretary's Order No. 4-2001 (66 FR 29656).

Subpart A--General Regulations


Sec.  541.0  Introductory statement.

    (a) Section 13(a)(1) of the Fair Labor Standards Act, as amended, 
provides an exemption from the Act's minimum wage and overtime 
requirements for any employee employed in a bona fide executive, 
administrative, or professional capacity (including any employee 
employed in the capacity of academic administrative personnel or 
teacher in elementary or secondary schools), or in the capacity of an 
outside sales employee, as such terms are defined and delimited from 
time to time by regulations of the Secretary, subject to the provisions 
of the Administrative Procedure Act. Section 13(a)(17) of the Act 
provides an exemption from the minimum wage and overtime requirements 
for computer systems analysts, computer programmers, software 
engineers, and other similarly skilled computer employees.
    (b) The requirements for these exemptions are contained in this 
part as follows: executive employees, subpart B; administrative 
employees, subpart C; professional employees, subpart D; computer 
employees, subpart E; outside sales employees, subpart F. Subpart G 
contains regulations regarding salary requirements applicable to most 
of the exemptions, including salary levels and the salary basis test. 
Subpart G also contains a provision for exempting certain highly 
compensated employees. Subpart H contains definitions and other 
miscellaneous provisions applicable to all or several of the 
exemptions.
    (c) Effective July 1, 1972, the Fair Labor Standards Act was 
amended to include within the protection of the equal pay provisions 
those employees exempt from the minimum wage and overtime pay 
provisions as bona fide executive, administrative, and professional 
employees (including any employee employed in the capacity of academic 
administrative personnel or teacher in elementary or secondary 
schools), or in the capacity of an outside sales employee under section 
13(a)(1) of the Act. The equal pay provisions in section 6(d) of the 
Fair Labor Standards Act are administered and enforced by the United 
States Equal Employment Opportunity Commission.


Sec.  541.1  Terms used in regulations.

    Act means the Fair Labor Standards Act of 1938, as amended.
    Administrator means the Administrator of the Wage and Hour 
Division, United States Department of Labor. The Secretary of Labor has 
delegated to the Administrator the functions vested in the Secretary 
under sections 13(a)(1) and 13(a)(17) of the Fair Labor Standards Act.


Sec.  541.2  Job titles insufficient.

    A job title alone is insufficient to establish the exempt status of 
an employee. The exempt or nonexempt status of any particular employee 
must be determined on the basis of whether the employee's salary and 
duties meet the requirements of the regulations in this part.


Sec.  541.3  Scope of the section 13(a)(1) exemptions.

    (a) The section 13(a)(1) exemptions and the regulations in this 
part do not apply to manual laborers or other ``blue collar'' workers 
who perform work involving repetitive operations with their hands, 
physical skill and energy. Such nonexempt ``blue collar'' employees 
gain the skills and knowledge required for performance of their routine 
manual and physical work through apprenticeships and on-the-job 
training, not through the prolonged

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course of specialized intellectual instruction required for exempt 
learned professional employees such as medical doctors, architects and 
archeologists. Thus, for example, non-management production-line 
employees and non-management employees in maintenance, construction and 
similar occupations such as carpenters, electricians, mechanics, 
plumbers, iron workers, craftsmen, operating engineers, longshoremen, 
construction workers and laborers are entitled to minimum wage and 
overtime premium pay under the Fair Labor Standards Act, and are not 
exempt under the regulations in this part no matter how highly paid 
they might be.
    (b)(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 Sec.  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 Sec.  
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 Sec.  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.


Sec.  541.4  Other laws and collective bargaining agreements.

    The Fair Labor Standards Act provides minimum standards that may be 
exceeded, but cannot be waived or reduced. Employers must comply, for 
example, with any Federal, State or municipal laws, regulations or 
ordinances establishing a higher minimum wage or lower maximum workweek 
than those established under the Act. Similarly, employers, on their 
own initiative or under a collective bargaining agreement with a labor 
union, are not precluded by the Act from providing a wage higher than 
the statutory minimum, a shorter workweek than the statutory maximum, 
or a higher overtime premium (double time, for example) than provided 
by the Act. While collective bargaining agreements cannot waive or 
reduce the Act's protections, nothing in the Act or the regulations in 
this part relieves employers from their contractual obligations under 
collective bargaining agreements.

Subpart B--Executive Employees


Sec.  541.100  General rule for executive employees.

    (a) The term ``employee employed in a bona fide executive 
capacity'' in section 13(a)(1) of the Act shall mean any employee:
    (1) Compensated on a salary basis at a rate of not less than $455 
per week (or $380 per week, if employed in American Samoa by employers 
other than the Federal Government), exclusive of board, lodging or 
other facilities;
    (2) Whose primary duty is management of the enterprise in which the 
employee is employed or of a customarily recognized department or 
subdivision thereof;
    (3) Who customarily and regularly directs the work of two or more 
other employees; and
    (4) Who has the authority to hire or fire other employees or whose 
suggestions and recommendations as to the hiring, firing, advancement, 
promotion or any other change of status of other employees are given 
particular weight.
    (b) The phrase ``salary basis'' is defined at Sec.  541.602; 
``board, lodging or other facilities'' is defined at Sec.  541.606; 
``primary duty'' is defined at Sec.  541.700; and ``customarily and 
regularly'' is defined at Sec.  541.701.


Sec.  541.101  Business owner.

    The term ``employee employed in a bona fide executive capacity'' in 
section 13(a)(1) of the Act also includes any employee who owns at 
least a bona fide 20-percent equity interest in the enterprise in which 
the employee is employed, regardless of whether the business is a 
corporate or other type of organization, and who is actively engaged in 
its management. The term ``management'' is defined in Sec.  541.102. 
The requirements of Subpart G (salary requirements) of this part do not 
apply to the business owners described in this section.


Sec.  541.102  Management.

    Generally, ``management'' includes, but is not limited to, 
activities such as interviewing, selecting, and training of employees; 
setting and adjusting their rates of pay and hours of work; directing 
the work of employees; maintaining production or sales records for use 
in supervision or control; appraising employees' productivity and 
efficiency for the purpose of recommending promotions or other changes 
in status; handling employee complaints and grievances; disciplining 
employees; planning the work; determining the techniques to be used; 
apportioning the work among the employees; determining the type of 
materials, supplies, machinery, equipment or tools to be used or 
merchandise to be bought, stocked and sold; controlling the flow and 
distribution of materials or merchandise and supplies; providing for 
the safety and security of the employees or the property; planning and 
controlling the budget; and monitoring or implementing legal compliance 
measures.


Sec.  541.103  Department or subdivision.

    (a) The phrase ``a customarily recognized department or 
subdivision'' is intended to distinguish between a mere collection of 
employees assigned from time to time to a specific job or series of 
jobs and a unit with permanent status and function. A customarily 
recognized department or subdivision must have a permanent status and a 
continuing function. For example, a

[[Page 22262]]

large employer's human resources department might have subdivisions for 
labor relations, pensions and other benefits, equal employment 
opportunity, and personnel management, each of which has a permanent 
status and function.
    (b) When an enterprise has more than one establishment, the 
employee in charge of each establishment may be considered in charge of 
a recognized subdivision of the enterprise.
    (c) A recognized department or subdivision need not be physically 
within the employer's establishment and may move from place to place. 
The mere fact that the employee works in more than one location does 
not invalidate the exemption if other factors show that the employee is 
actually in charge of a recognized unit with a continuing function in 
the organization.
    (d) Continuity of the same subordinate personnel is not essential 
to the existence of a recognized unit with a continuing function. An 
otherwise exempt employee will not lose the exemption merely because 
the employee draws and supervises workers from a pool or supervises a 
team of workers drawn from other recognized units, if other factors are 
present that indicate that the employee is in charge of a recognized 
unit with a continuing function.


Sec.  541.104  Two or more other employees.

    (a) To qualify as an exempt executive under Sec.  541.100, the 
employee must customarily and regularly direct the work of two or more 
other employees. The phrase ``two or more other employees'' means two 
full-time employees or their equivalent. One full-time and two half-
time employees, for example, are equivalent to two full-time employees. 
Four half-time employees are also equivalent.
    (b) The supervision can be distributed among two, three or more 
employees, but each such employee must customarily and regularly direct 
the work of two or more other full-time employees or the equivalent. 
Thus, for example, a department with five full-time nonexempt workers 
may have up to two exempt supervisors if each such supervisor 
customarily and regularly directs the work of two of those workers.
    (c) An employee who merely assists the manager of a particular 
department and supervises two or more employees only in the actual 
manager's absence does not meet this requirement.
    (d) Hours worked by an employee cannot be credited more than once 
for different executives. Thus, a shared responsibility for the 
supervision of the same two employees in the same department does not 
satisfy this requirement. However, a full-time employee who works four 
hours for one supervisor and four hours for a different supervisor, for 
example, can be credited as a half-time employee for both supervisors.


Sec.  541.105  Particular weight.

    To determine whether an employee's suggestions and recommendations 
are given ``particular weight,'' factors to be considered include, but 
are not limited to, whether it is part of the employee's job duties to 
make such suggestions and recommendations; the frequency with which 
such suggestions and recommendations are made or requested; and the 
frequency with which the employee's suggestions and recommendations are 
relied upon. Generally, an executive's suggestions and recommendations 
must pertain to employees whom the executive customarily and regularly 
directs. It does not include an occasional suggestion with regard to 
the change in status of a co-worker. An employee's suggestions and 
recommendations may still be deemed to have ``particular weight'' even 
if a higher level manager's recommendation has more importance and even 
if the employee does not have authority to make the ultimate decision 
as to the employee's change in status.


Sec.  541.106  Concurrent duties.

    (a) Concurrent performance of exempt and nonexempt work does not 
disqualify an employee from the executive exemption if the requirements 
of Sec.  541.100 are otherwise met. Whether an employee meets the 
requirements of Sec.  541.100 when the employee performs concurrent 
duties is determined on a case-by-case basis and based on the factors 
set forth in Sec.  541.700. Generally, exempt executives make the 
decision regarding when to perform nonexempt duties and remain 
responsible for the success or failure of business operations under 
their management while performing the nonexempt work. In contrast, the 
nonexempt employee generally is directed by a supervisor to perform the 
exempt work or performs the exempt work for defined time periods. An 
employee whose primary duty is ordinary production work or routine, 
recurrent or repetitive tasks cannot qualify for exemption as an 
executive.
    (b) For example, an assistant manager in a retail establishment may 
perform work such as serving customers, cooking food, stocking shelves 
and cleaning the establishment, but performance of such nonexempt work 
does not preclude the exemption if the assistant manager's primary duty 
is management. An assistant manager can supervise employees and serve 
customers at the same time without losing the exemption. An exempt 
employee can also simultaneously direct the work of other employees and 
stock shelves.
    (c) In contrast, a relief supervisor or working supervisor whose 
primary duty is performing nonexempt work on the production line in a 
manufacturing plant does not become exempt merely because the nonexempt 
production line employee occasionally has some responsibility for 
directing the work of other nonexempt production line employees when, 
for example, the exempt supervisor is unavailable. Similarly, an 
employee whose primary duty is to work as an electrician is not an 
exempt executive even if the employee also directs the work of other 
employees on the job site, orders parts and materials for the job, and 
handles requests from the prime contractor.

Subpart C--Administrative Employees


Sec.  541.200  General rule for administrative employees.

    (a) The term ``employee employed in a bona fide administrative 
capacity'' in section 13(a)(1) of the Act shall mean any employee:
    (1) Compensated on a salary or fee basis at a rate of not less than 
$455 per week (or $380 per week, if employed in American Samoa by 
employers other than the Federal Government), exclusive of board, 
lodging or other facilities;
    (2) Whose primary duty is the performance of office or non-manual 
work directly related to the management or general business operations 
of the employer or the employer's customers; and
    (3) Whose primary duty includes the exercise of discretion and 
independent judgment with respect to matters of significance.
    (b) The term ``salary basis'' is defined at Sec.  541.602; ``fee 
basis'' is defined at Sec.  541.605; ``board, lodging or other 
facilities'' is defined at Sec.  541.606; and ``primary duty'' is 
defined at Sec.  541.700.


Sec.  541.201  Directly related to management or general business 
operations.

    (a) To qualify for the administrative exemption, an employee's 
primary duty must be the performance of work directly related to the 
management or general business operations of the employer or the 
employer's customers. The phrase ``directly related to the management 
or general business operations'' refers to the type of work

[[Page 22263]]

performed by the employee. To meet this requirement, an employee must 
perform work directly related to assisting with the running or 
servicing of the business, as distinguished, for example, from working 
on a manufacturing production line or selling a product in a retail or 
service establishment.
    (b) Work directly related to management or general business 
operations includes, but is not limited to, work in functional areas 
such as tax; finance; accounting; budgeting; auditing; insurance; 
quality control; purchasing; procurement; advertising; marketing; 
research; safety and health; personnel management; human resources; 
employee benefits; labor relations; public relations, government 
relations; computer network, internet and database administration; 
legal and regulatory compliance; and similar activities. Some of these 
activities may be performed by employees who also would qualify for 
another exemption.
    (c) An employee may qualify for the administrative exemption if the 
employee's primary duty is the performance of work directly related to 
the management or general business operations of the employer's 
customers. Thus, for example, employees acting as advisers or 
consultants to their employer's clients or customers (as tax experts or 
financial consultants, for example) may be exempt.


Sec.  541.202  Discretion and independent judgment.

    (a) To qualify for the administrative exemption, an employee's 
primary duty must include the exercise of discretion and independent 
judgment with respect to matters of significance. In general, the 
exercise of discretion and independent judgment involves the comparison 
and the evaluation of possible courses of conduct, and acting or making 
a decision after the various possibilities have been considered. The 
term ``matters of significance'' refers to the level of importance or 
consequence of the work performed.
    (b) The phrase ``discretion and independent judgment'' must be 
applied in the light of all the facts involved in the particular 
employment situation in which the question arises. Factors to consider 
when determining whether an employee exercises discretion and 
independent judgment with respect to matters of significance include, 
but are not limited to: whether the employee has authority to 
formulate, affect, interpret, or implement management policies or 
operating practices; whether the employee carries out major assignments 
in conducting the operations of the business; whether the employee 
performs work that affects business operations to a substantial degree, 
even if the employee's assignments are related to operation of a 
particular segment of the business; whether the employee has authority 
to commit the employer in matters that have significant financial 
impact; whether the employee has authority to waive or deviate from 
established policies and procedures without prior approval; whether the 
employee has authority to negotiate and bind the company on significant 
matters; whether the employee provides consultation or expert advice to 
management; whether the employee is involved in planning long- or 
short-term business objectives; whether the employee investigates and 
resolves matters of significance on behalf of management; and whether 
the employee represents the company in handling complaints, arbitrating 
disputes or resolving grievances.
    (c) The exercise of discretion and independent judgment implies 
that the employee has authority to make an independent choice, free 
from immediate direction or supervision. However, employees can 
exercise discretion and independent judgment even if their decisions or 
recommendations are reviewed at a higher level. Thus, the term 
``discretion and independent judgment'' does not require that the 
decisions made by an employee have a finality that goes with unlimited 
authority and a complete absence of review. The decisions made as a 
result of the exercise of discretion and independent judgment may 
consist of recommendations for action rather than the actual taking of 
action. The fact that an employee's decision may be subject to review 
and that upon occasion the decisions are revised or reversed after 
review does not mean that the employee is not exercising discretion and 
independent judgment. For example, the policies formulated by the 
credit manager of a large corporation may be subject to review by 
higher company officials who may approve or disapprove these policies. 
The management consultant who has made a study of the operations of a 
business and who has drawn a proposed change in organization may have 
the plan reviewed or revised by superiors before it is submitted to the 
client.
    (d) An employer's volume of business may make it necessary to 
employ a number of employees to perform the same or similar work. The 
fact that many employees perform identical work or work of the same 
relative importance does not mean that the work of each such employee 
does not involve the exercise of discretion and independent judgment 
with respect to matters of significance.
    (e) The exercise of discretion and independent judgment must be 
more than the use of skill in applying well-established techniques, 
procedures or specific standards described in manuals or other sources. 
See also Sec.  541.704 regarding use of manuals. The exercise of 
discretion and independent judgment also does not include clerical or 
secretarial work, recording or tabulating data, or performing other 
mechanical, repetitive, recurrent or routine work. An employee who 
simply tabulates data is not exempt, even if labeled as a 
``statistician.''
    (f) An employee does not exercise discretion and independent 
judgment with respect to matters of significance merely because the 
employer will experience financial losses if the employee fails to 
perform the job properly. For example, a messenger who is entrusted 
with carrying large sums of money does not exercise discretion and 
independent judgment with respect to matters of significance even 
though serious consequences may flow from the employee's neglect. 
Similarly, an employee who operates very expensive equipment does not 
exercise discretion and independent judgment with respect to matters of 
significance merely because improper performance of the employee's 
duties may cause serious financial loss to the employer.


Sec.  541.203  Administrative exemption examples.

    (a) Insurance claims adjusters generally meet the duties 
requirements for the administrative exemption, whether they work for an 
insurance company or other type of company, if their duties include 
activities such as interviewing insureds, witnesses and physicians; 
inspecting property damage; reviewing factual information to prepare 
damage estimates; evaluating and making recommendations regarding 
coverage of claims; determining liability and total value of a claim; 
negotiating settlements; and making recommendations regarding 
litigation.
    (b) Employees in the financial services industry generally meet the 
duties requirements for the administrative exemption if their duties 
include work such as collecting and analyzing information regarding the 
customer's income, assets, investments or debts; determining which 
financial products best meet the customer's needs and financial 
circumstances; advising the customer regarding the advantages and 
disadvantages of different financial

[[Page 22264]]

products; and marketing, servicing or promoting the employer's 
financial products. However, an employee whose primary duty is selling 
financial products does not qualify for the administrative exemption.
    (c) An employee who leads a team of other employees assigned to 
complete major projects for the employer (such as purchasing, selling 
or closing all or part of the business, negotiating a real estate 
transaction or a collective bargaining agreement, or designing and 
implementing productivity improvements) generally meets the duties 
requirements for the administrative exemption, even if the employee 
does not have direct supervisory responsibility over the other 
employees on the team.
    (d) An executive assistant or administrative assistant to a 
business owner or senior executive of a large business generally meets 
the duties requirements for the administrative exemption if such 
employee, without specific instructions or prescribed procedures, has 
been delegated authority regarding matters of significance.
    (e) Human resources managers who formulate, interpret or implement 
employment policies and management consultants who study the operations 
of a business and propose changes in organization generally meet the 
duties requirements for the administrative exemption. However, 
personnel clerks who ``screen'' applicants to obtain data regarding 
their minimum qualifications and fitness for employment generally do 
not meet the duties requirements for the administrative exemption. Such 
personnel clerks typically will reject all applicants who do not meet 
minimum standards for the particular job or for employment by the 
company. The minimum standards are usually set by the exempt human 
resources manager or other company officials, and the decision to hire 
from the group of qualified applicants who do meet the minimum 
standards is similarly made by the exempt human resources manager or 
other company officials. Thus, when the interviewing and screening 
functions are performed by the human resources manager or personnel 
manager who makes the hiring decision or makes recommendations for 
hiring from the pool of qualified applicants, such duties constitute 
exempt work, even though routine, because this work is directly and 
closely related to the employee's exempt functions.
    (f) Purchasing agents with authority to bind the company on 
significant purchases generally meet the duties requirements for the 
administrative exemption even if they must consult with top management 
officials when making a purchase commitment for raw materials in excess 
of the contemplated plant needs.
    (g) Ordinary inspection work generally does not meet the duties 
requirements for the administrative exemption. Inspectors normally 
perform specialized work along standardized lines involving well-
established techniques and procedures which may have been catalogued 
and described in manuals or other sources. Such inspectors rely on 
techniques and skills acquired by special training or experience. They 
have some leeway in the performance of their work but only within 
closely prescribed limits.
    (h) Employees usually called examiners or graders, such as 
employees that grade lumber, generally do not meet the duties 
requirements for the administrative exemption. Such employees usually 
perform work involving the comparison of products with established 
standards which are frequently catalogued. Often, after continued 
reference to the written standards, or through experience, the employee 
acquires sufficient knowledge so that reference to written standards is 
unnecessary. The substitution of the employee's memory for a manual of 
standards does not convert the character of the work performed to 
exempt work requiring the exercise of discretion and independent 
judgment.
    (i) Comparison shopping performed by an employee of a retail store 
who merely reports to the buyer the prices at a competitor's store does 
not qualify for the administrative exemption. However, the buyer who 
evaluates such reports on competitor prices to set the employer's 
prices generally meets the duties requirements for the administrative 
exemption.
    (j) Public sector inspectors or investigators of various types, 
such as fire prevention or safety, building or construction, health or 
sanitation, environmental or soils specialists and similar employees, 
generally do not meet the duties requirements for the administrative 
exemption because their work typically does not involve work directly 
related to the management or general business operations of the 
employer. Such employees also do not qualify for the administrative 
exemption because their work involves the use of skills and technical 
abilities in gathering factual information, applying known standards or 
prescribed procedures, determining which procedure to follow, or 
determining whether prescribed standards or criteria are met.


Sec.  541.204  Educational establishments.

    (a) The term ``employee employed in a bona fide administrative 
capacity'' in section 13(a)(1) of the Act also includes employees:
    (1) Compensated for services on a salary or fee basis at a rate of 
not less than $455 per week (or $380 per week, if employed in American 
Samoa by employers other than the Federal Government) exclusive of 
board, lodging or other facilities, or on a salary basis which is at 
least equal to the entrance salary for teachers in the educational 
establishment by which employed; and
    (2) Whose primary duty is performing administrative functions 
directly related to academic instruction or training in an educational 
establishment or department or subdivision thereof.
    (b) The term ``educational establishment'' means an elementary or 
secondary school system, an institution of higher education or other 
educational institution. Sections 3(v) and 3(w) of the Act define 
elementary and secondary schools as those day or residential schools 
that provide elementary or secondary education, as determined under 
State law. Under the laws of most States, such education includes the 
curriculums in grades 1 through 12; under many it includes also the 
introductory programs in kindergarten. Such education in some States 
may also include nursery school programs in elementary education and 
junior college curriculums in secondary education. The term ``other 
educational establishment'' includes special schools for mentally or 
physically disabled or gifted children, regardless of any 
classification of such schools as elementary, secondary or higher. 
Factors relevant in determining whether post-secondary career programs 
are educational institutions include whether the school is licensed by 
a state agency responsible for the state's educational system or 
accredited by a nationally recognized accrediting organization for 
career schools. Also, for purposes of the exemption, no distinction is 
drawn between public and private schools, or between those operated for 
profit and those that are not for profit.
    (c) The phrase ``performing administrative functions directly 
related to academic instruction or training'' means work related to the 
academic operations and functions in a school rather than to 
administration along the lines of general business operations. Such 
academic administrative functions include operations directly in the 
field of education. Jobs relating to areas outside the educational 
field are not

[[Page 22265]]

within the definition of academic administration.
    (1) Employees engaged in academic administrative functions include: 
the superintendent or other head of an elementary or secondary school 
system, and any assistants, responsible for administration of such 
matters as curriculum, quality and methods of instructing, measuring 
and testing the learning potential and achievement of students, 
establishing and maintaining academic and grading standards, and other 
aspects of the teaching program; the principal and any vice-principals 
responsible for the operation of an elementary or secondary school; 
department heads in institutions of higher education responsible for 
the administration of the mathematics department, the English 
department, the foreign language department, etc.; academic counselors 
who perform work such as administering school testing programs, 
assisting students with academic problems and advising students 
concerning degree requirements; and other employees with similar 
responsibilities.
    (2) Jobs relating to building management and maintenance, jobs 
relating to the health of the students, and academic staff such as 
social workers, psychologists, lunch room managers or dietitians do not 
perform academic administrative functions. Although such work is not 
considered academic administration, such employees may qualify for 
exemption under Sec.  541.200 or under other sections of this part, 
provided the requirements for such exemptions are met.

Subpart D--Professional Employees


Sec.  541.300  General rule for professional employees.

    (a) The term ``employee employed in a bona fide professional 
capacity'' in section 13(a)(1) of the Act shall mean any employee:
    (1) Compensated on a salary or fee basis at a rate of not less than 
$455 per week (or $380 per week, if employed in American Samoa by 
employers other than the Federal Government), exclusive of board, 
lodging, or other facilities; and
    (2) Whose primary duty is the performance of work:
    (i) Requiring knowledge of an advanced type in a field of science 
or learning customarily acquired by a prolonged course of specialized 
intellectual instruction; or
    (ii) Requiring invention, imagination, originality or talent in a 
recognized field of artistic or creative endeavor.
    (b) The term ``salary basis'' is defined at Sec.  541.602; ``fee 
basis'' is defined at Sec.  541.605; ``board, lodging or other 
facilities'' is defined at Sec.  541.606; and ``primary duty'' is 
defined at Sec.  541.700.


Sec.  541.301  Learned professionals.

    (a) To qualify for the learned professional exemption, an 
employee's primary duty must be the performance of work requiring 
advanced knowledge in a field of science or learning customarily 
acquired by a prolonged course of specialized intellectual instruction. 
This primary duty test includes three elements:
    (1) The employee must perform work requiring advanced knowledge;
    (2) The advanced knowledge must be in a field of science or 
learning; and
    (3) The advanced knowledge must be customarily acquired by a 
prolonged course of specialized intellectual instruction.
    (b) The phrase ``work requiring advanced knowledge'' means work 
which is predominantly intellectual in character, and which includes 
work requiring the consistent exercise of discretion and judgment, as 
distinguished from performance of routine mental, manual, mechanical or 
physical work. An employee who performs work requiring advanced 
knowledge generally uses the advanced knowledge to analyze, interpret 
or make deductions from varying facts or circumstances. Advanced 
knowledge cannot be attained at the high school level.
    (c) The phrase ``field of science or learning'' includes the 
traditional professions of law, medicine, theology, accounting, 
actuarial computation, engineering, architecture, teaching, various 
types of physical, chemical and biological sciences, pharmacy and other 
similar occupations that have a recognized professional status as 
distinguished from the mechanical arts or skilled trades where in some 
instances the knowledge is of a fairly advanced type, but is not in a 
field of science or learning.
    (d) The phrase ``customarily acquired by a prolonged course of 
specialized intellectual instruction'' restricts the exemption to 
professions where specialized academic training is a standard 
prerequisite for entrance into the profession. The best prima facie 
evidence that an employee meets this requirement is possession of the 
appropriate academic degree. However, the word ``customarily'' means 
that the exemption is also 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 
intellectual instruction. Thus, for example, the learned professional 
exemption is available to the occasional lawyer who has not gone to law 
school, or the occasional chemist who is not the possessor of a degree 
in chemistry. However, the learned professional exemption is not 
available for occupations that customarily may be performed with only 
the general knowledge acquired by an academic degree in any field, with 
knowledge acquired through an apprenticeship, or with training in the 
performance of routine mental, manual, mechanical or physical 
processes. The learned professional exemption also does not apply to 
occupations in which most employees have acquired their skill by 
experience rather than by advanced specialized intellectual 
instruction.
    (e) (1) Registered or certified medical technologists. Registered 
or certified medical technologists who have successfully completed 
three academic years of pre-professional study in an accredited college 
or university plus a fourth year of professional course work in a 
school of medical technology approved by the Council of Medical 
Education of the American Medical Association generally meet the duties 
requirements for the learned professional exemption.
    (2) Nurses. Registered nurses who are registered by the appropriate 
State examining board generally meet the duties requirements for the 
learned professional exemption. Licensed practical nurses and other 
similar health care employees, however, generally do not qualify as 
exempt learned professionals because possession of a specialized 
advanced academic degree is not a standard prerequisite for entry into 
such occupations.
    (3) Dental hygienists. Dental hygienists who have successfully 
completed four academic years of pre-professional and professional 
study in an accredited college or university approved by the Commission 
on Accreditation of Dental and Dental Auxiliary Educational Programs of 
the American Dental Association generally meet the duties requirements 
for the learned professional exemption.
    (4) Physician assistants. Physician assistants who have 
successfully completed four academic years of pre-professional and 
professional study, including graduation from a physician assistant 
program accredited by the Accreditation Review Commission on Education 
for the Physician Assistant, and who are certified by the National 
Commission on Certification of Physician Assistants generally meet the

[[Page 22266]]

duties requirements for the learned professional exemption.
    (5) Accountants. Certified public accountants generally meet the 
duties requirements for the learned professional exemption. In 
addition, many other accountants who are not certified public 
accountants but perform similar job duties may qualify as exempt 
learned professionals. However, accounting clerks, bookkeepers and 
other employees who normally perform a great deal of routine work 
generally will not qualify as exempt professionals.
    (6) Chefs. Chefs, such as executive chefs and sous chefs, who have 
attained a four-year specialized academic degree in a culinary arts 
program, generally meet the duties requirements for the learned 
professional exemption. The learned professional exemption is not 
available to cooks who perform predominantly routine mental, manual, 
mechanical or physical work.
    (7) Paralegals. Paralegals and legal assistants generally do not 
qualify as exempt learned professionals because an advanced specialized 
academic degree is not a standard prerequisite for entry into the 
field. Although many paralegals possess general four-year advanced 
degrees, most specialized paralegal programs are two-year associate 
degree programs from a community college or equivalent institution. 
However, the learned professional exemption is available for paralegals 
who possess advanced specialized degrees in other professional fields 
and apply advanced knowledge in that field in the performance of their 
duties. For example, if a law firm hires an engineer as a paralegal to 
provide expert advice on product liability cases or to assist on patent 
matters, that engineer would qualify for exemption.
    (8) Athletic trainers. Athletic trainers who have successfully 
completed four academic years of pre-professional and professional 
study in a specialized curriculum accredited by the Commission on 
Accreditation of Allied Health Education Programs and who are certified 
by the Board of Certification of the National Athletic Trainers 
Association Board of Certification generally meet the duties 
requirements for the learned professional exemption.
    (9) Funeral directors or embalmers. Licensed funeral directors and 
embalmers who are licensed by and working in a state that requires 
successful completion of four academic years of pre-professional and 
professional study, including graduation from a college of mortuary 
science accredited by the American Board of Funeral Service Education, 
generally meet the duties requirements for the learned professional 
exemption.
    (f) The areas in which the professional exemption may be available 
are expanding. As knowledge is developed, academic training is 
broadened and specialized degrees are offered in new and diverse 
fields, thus creating new specialists in particular fields of science 
or learning. When an advanced specialized degree has become a standard 
requirement for a particular occupation, that occupation may have 
acquired the characteristics of a learned profession. Accrediting and 
certifying organizations similar to those listed in paragraphs (e)(1), 
(e)(3), (e)(4), (e)(8) and (e)(9) of this section also may be created 
in the future. Such organizations may develop similar specialized 
curriculums and certification programs which, if a standard requirement 
for a particular occupation, may indicate that the occupation has 
acquired the characteristics of a learned profession.


Sec.  541.302  Creative professionals.

    (a) To qualify for the creative professional exemption, an 
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 as opposed to routine mental, manual, 
mechanical or physical work. The exemption does not apply to work which 
can be produced by a person with general manual or intellectual ability 
and training.
    (b) To qualify for exemption as a creative professional, the work 
performed must be ``in a recognized field of artistic or creative 
endeavor.'' This includes such fields as music, writing, acting and the 
graphic arts.
    (c) The requirement of ``invention, imagination, originality or 
talent'' distinguishes the creative professions from work that 
primarily depends on intelligence, diligence and accuracy. The duties 
of employees vary widely, and exemption as a creative professional 
depends on the extent of the invention, imagination, originality or 
talent exercised by the employee. Determination of exempt creative 
professional status, therefore, must be made on a case-by-case basis. 
This requirement generally is met by actors, musicians, composers, 
conductors, and soloists; painters who at most are given the subject 
matter of their painting; cartoonists who are merely told the title or 
underlying concept of a cartoon and must rely on their own creative 
ability to express the concept; essayists, novelists, short-story 
writers and screen-play writers who choose their own subjects and hand 
in a finished piece of work to their employers (the majority of such 
persons are, of course, not employees but self-employed); and persons 
holding the more responsible writing positions in advertising agencies. 
This requirement generally is not met by a person who is employed as a 
copyist, as an ``animator'' of motion-picture cartoons, or as a 
retoucher of photographs, since such work is not properly described as 
creative in character.
    (d) Journalists may satisfy the duties requirements for the 
creative professional exemption if their primary duty is work requiring 
invention, imagination, originality or talent, as opposed to work which 
depends primarily on intelligence, diligence and accuracy. Employees of 
newspapers, magazines, television and other media 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. Thus, 
for example, newspaper reporters who merely rewrite press releases or 
who write standard recounts of public information by gathering facts on 
routine community events are not exempt creative professionals. 
Reporters also do not qualify as exempt creative professionals if their 
work product is subject to substantial control by the employer. 
However, journalists may qualify as exempt creative professionals if 
their primary duty is performing on the air in radio, television or 
other electronic media; conducting investigative interviews; analyzing 
or interpreting public events; writing editorials, opinion columns or 
other commentary; or acting as a narrator or commentator.


Sec.  541.303  Teachers.

    (a) The term ``employee employed in a bona fide professional 
capacity'' in section 13(a)(1) of the Act also means any employee with 
a primary duty of teaching, tutoring, instructing or lecturing in the 
activity of imparting knowledge and who is employed and engaged in this 
activity as a teacher in an educational establishment by which the 
employee is employed. The term ``educational establishment'' is defined 
in Sec.  541.204(b).
    (b) Exempt teachers include, but are not limited to: Regular 
academic teachers; teachers of kindergarten or nursery school pupils; 
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 instrumental

[[Page 22267]]

music instructors. Those faculty members who are engaged as teachers 
but also spend a considerable amount of their time in extracurricular 
activities such as coaching athletic teams or acting as moderators or 
advisors in such areas as drama, speech, debate or journalism are 
engaged in teaching. Such activities are a recognized part of the 
schools' responsibility in contributing to the educational development 
of the student.
    (c) The possession of an elementary or secondary teacher's 
certificate provides a clear means of identifying the individuals 
contemplated as being within the scope of the exemption for teaching 
professionals. Teachers who possess a teaching certificate qualify for 
the exemption regardless of the terminology (e.g., permanent, 
conditional, standard, provisional, temporary, emergency, or unlimited) 
used by the State to refer to different kinds of certificates. However, 
private schools and public schools are not uniform in requiring a 
certificate for employment as an elementary or secondary school 
teacher, and a teacher's certificate is not generally necessary for 
employment in institutions of higher education or other educational 
establishments. Therefore, a teacher who is not certified may be 
considered for exemption, provided that such individual is employed as 
a teacher by the employing school or school system.
    (d) The requirements of Sec.  541.300 and Subpart G (salary 
requirements) of this part do not apply to the teaching professionals 
described in this section.


Sec.  541.304  Practice of law or medicine.

    (a) The term ``employee employed in a bona fide professional 
capacity'' in section 13(a)(1) of the Act also shall mean:
    (1) Any employee who is the holder of a valid license or 
certificate permitting the practice of law or medicine or any of their 
branches and is actually engaged in the practice thereof; and
    (2) Any employee who is the holder of the requisite academic degree 
for the general practice of medicine and is engaged in an internship or 
resident program pursuant to the practice of the profession.
    (b) In the case of medicine, the exemption applies to physicians 
and other practitioners licensed and practicing in the field of medical 
science and healing or any of the medical specialties practiced by 
physicians or practitioners. The term ``physicians'' includes medical 
doctors including general practitioners and specialists, osteopathic 
physicians (doctors of osteopathy), podiatrists, dentists (doctors of 
dental medicine), and optometrists (doctors of optometry or bachelors 
of science in optometry).
    (c) Employees engaged in internship or resident programs, whether 
or not licensed to practice prior to commencement of the program, 
qualify as exempt professionals if they enter such internship or 
resident programs after the earning of the appropriate degree required 
for the general practice of their profession.
    (d) The requirements of Sec.  541.300 and subpart G (salary 
requirements) of this part do not apply to the employees described in 
this section.

Subpart E--Computer Employees


Sec.  541.400  General rule for computer employees.

    (a) Computer systems analysts, computer programmers, software 
engineers or other similarly skilled workers in the computer field are 
eligible for exemption as professionals under section 13(a)(1) of the 
Act and under section 13(a)(17) of the Act. Because job titles vary 
widely and change quickly in the computer industry, job titles are not 
determinative of the applicability of this exemption.
    (b) The section 13(a)(1) exemption applies to any computer employee 
compensated on a salary or fee basis at a rate of not less than $455 
per week (or $380 per week, if employed in American Samoa by employers 
other than the Federal Government), exclusive of board, lodging or 
other facilities, and the section 13(a)(17) exemption applies to any 
computer employee compensated on an hourly basis at a rate not less 
than $27.63 an hour. In addition, under either section 13(a)(1) or 
section 13(a)(17) of the Act, the exemptions apply only to computer 
employees whose primary duty consists of:
    (1) The application of systems analysis techniques and procedures, 
including consulting with users, to determine hardware, software or 
system functional specifications;
    (2) The design, development, documentation, analysis, creation, 
testing or modification of computer systems or programs, including 
prototypes, based on and related to user or system design 
specifications;
    (3) The design, documentation, testing, creation or modification of 
computer programs related to machine operating systems; or
    (4) A combination of the aforementioned duties, the performance of 
which requires the same level of skills.
    (c) The term ``salary basis'' is defined at Sec.  541.602; ``fee 
basis'' is defined at Sec.  541.605; ``board, lodging or other 
facilities'' is defined at Sec.  541.606; and ``primary duty'' is 
defined at Sec.  541.700.


Sec.  541.401  Computer manufacture and repair.

    The exemption for employees in computer occupations does not 
include employees engaged in the manufacture or repair of computer 
hardware and related equipment. Employees whose work is highly 
dependent upon, or facilitated by, the use of computers and computer 
software programs (e.g., engineers, drafters and others skilled in 
computer-aided design software), but who are not primarily engaged in 
computer systems analysis and programming or other similarly skilled 
computer-related occupations identified in Sec.  541.400(b), are also 
not exempt computer professionals.


Sec.  541.402  Executive and administrative computer employees.

    Computer employees within the scope of this exemption, as well as 
those employees not within its scope, may also have executive and 
administrative duties which qualify the employees for exemption under 
subpart B or subpart C of this part. For example, systems analysts and 
computer programmers generally meet the duties requirements for the 
administrative exemption if their primary duty includes work such as 
planning, scheduling, and coordinating activities required to develop 
systems to solve complex business, scientific or engineering problems 
of the employer or the employer's customers. Similarly, a senior or 
lead computer programmer who manages the work of two or more other 
programmers in a customarily recognized department or subdivision of 
the employer, and whose recommendations as to the hiring, firing, 
advancement, promotion or other change of status of the other 
programmers are given particular weight, generally meets the duties 
requirements for the executive exemption.

Subpart F--Outside Sales Employees


Sec.  541.500  General rule for outside sales employees.

    (a) The term ``employee employed in the capacity of outside 
salesman'' in section 13(a)(1) of the Act shall mean any employee:
    (1) Whose primary duty is:
    (i) making sales within the meaning of section 3(k) of the Act, or
    (ii) obtaining orders or contracts for services or for the use of 
facilities for

[[Page 22268]]

which a consideration will be paid by the client or customer; and
    (2) Who is customarily and regularly engaged away from the 
employer's place or places of business in performing such primary duty.
    (b) The term ``primary duty'' is defined at Sec.  541.700. In 
determining the primary duty of an outside sales employee, work 
performed incidental to and in conjunction with the employee's own 
outside sales or solicitations, including incidental deliveries and 
collections, shall be regarded as exempt outside sales work. Other work 
that furthers the employee's sales efforts also shall be regarded as 
exempt work including, for example, writing sales reports, updating or 
revising the employee's sales or display catalogue, planning 
itineraries and attending sales conferences.
    (c) The requirements of subpart G (salary requirements) of this 
part do not apply to the outside sales employees described in this 
section.



Sec.  541.501  Making sales or obtaining orders.

    (a) Section 541.500 requires that the employee be engaged in:
    (1) Making sales within the meaning of section 3(k) of the Act, or
    (2) Obtaining orders or contracts for services or for the use of 
facilities.
    (b) Sales within the meaning of section 3(k) of the Act include the 
transfer of title to tangible property, and in certain cases, of 
tangible and valuable evidences of intangible property. Section 3(k) of 
the Act states that ``sale'' or ``sell'' includes any sale, exchange, 
contract to sell, consignment for sale, shipment for sale, or other 
disposition.
    (c) Exempt outside sales work includes not only the sales of 
commodities, but also ``obtaining orders or contracts for services or 
for the use of facilities for which a consideration will be paid by the 
client or customer.'' Obtaining orders for ``the use of facilities'' 
includes the selling of time on radio or television, the solicitation 
of advertising for newspapers and other periodicals, and the 
solicitation of freight for railroads and other transportation 
agencies.
    (d) The word ``services'' extends the outside sales exemption to 
employees who sell or take orders for a service, which may be performed 
for the customer by someone other than the person taking the order.



Sec.  541.502  Away from employer's place of business.

    An outside sales employee must be customarily and regularly engaged 
``away from the employer's place or places of business.'' The outside 
sales employee is an employee who makes sales at the customer's place 
of business or, if selling door-to-door, at the customer's home. 
Outside sales does not include sales made by mail, telephone or the 
Internet unless such contact is used merely as an adjunct to personal 
calls. Thus, any fixed site, whether home or office, used by a 
salesperson as a headquarters or for telephonic solicitation of sales 
is considered one of the employer's places of business, even though the 
employer is not in any formal sense the owner or tenant of the 
property. However, an outside sales employee does not lose the 
exemption by displaying samples in hotel sample rooms during trips from 
city to city; these sample rooms should not be considered as the 
employer's places of business. Similarly, an outside sales employee 
does not lose the exemption by displaying the employer's products at a 
trade show. If selling actually occurs, rather than just sales 
promotion, trade shows of short duration (i.e., one or two weeks) 
should not be considered as the employer's place of business.



Sec.  541.503  Promotion work.

    (a) Promotion work is one type of activity often performed by 
persons who make sales, which may or may not be exempt outside sales 
work, depending upon the circumstances under which it is performed. 
Promotional work that is actually performed incidental to and in 
conjunction with an employee's own outside sales or solicitations is 
exempt work. On the other hand, promotional work that is incidental to 
sales made, or to be made, by someone else is not exempt outside sales 
work. An employee who does not satisfy the requirements of this subpart 
may still qualify as an exempt employee under other subparts of this 
rule.
    (b) A manufacturer's representative, for example, may perform 
various types of promotional activities such as putting up displays and 
posters, removing damaged or spoiled stock from the merchant's shelves 
or rearranging the merchandise. Such an employee can be considered an 
exempt outside sales employee if the employee's primary duty is making 
sales or contracts. Promotion activities directed toward consummation 
of the employee's own sales are exempt. Promotional activities designed 
to stimulate sales that will be made by someone else are not exempt 
outside sales work.
    (c) Another example is a company representative who visits chain 
stores, arranges the merchandise on shelves, replenishes stock by 
replacing old with new merchandise, sets up displays and consults with 
the store manager when inventory runs low, but does not obtain a 
commitment for additional purchases. The arrangement of merchandise on 
the shelves or the replenishing of stock is not exempt work unless it 
is incidental to and in conjunction with the employee's own outside 
sales. Because the employee in this instance does not consummate the 
sale nor direct efforts toward the consummation of a sale, the work is 
not exempt outside sales work.



Sec.  541.504  Drivers who sell.

    (a) Drivers who deliver products and also sell such products may 
qualify as exempt outside sales employees only if the employee has a 
primary duty of making sales. In determining the primary duty of 
drivers who sell, work performed incidental to and in conjunction with 
the employee's own outside sales or solicitations, including loading, 
driving or delivering products, shall be regarded as exempt outside 
sales work.
    (b) Several factors should be considered in determining if a driver 
has a primary duty of making sales, including, but not limited to: a 
comparison of the driver's duties with those of other employees engaged 
as truck drivers and as salespersons; possession of a selling or 
solicitor's license when such license is required by law or ordinances; 
presence or absence of customary or contractual arrangements concerning 
amounts of products to be delivered; description of the employee's 
occupation in collective bargaining agreements; the employer's 
specifications as to qualifications for hiring; sales training; 
attendance at sales conferences; method of payment; and proportion of 
earnings directly attributable to sales.
    (c) Drivers who may qualify as exempt outside sales employees 
include:
    (1) A driver who provides the only sales contact between the 
employer and the customers visited, who calls on customers and takes 
orders for products, who delivers products from stock in the employee's 
vehicle or procures and delivers the product to the customer on a later 
trip, and who receives compensation commensurate with the volume of 
products sold.
    (2) A driver who obtains or solicits orders for the employer's 
products from persons who have authority to commit the customer for 
purchases.
    (3) A driver who calls on new prospects for customers along the 
employee's route and attempts to convince them of the desirability of 
accepting regular delivery of goods.
    (4) A driver who calls on established customers along the route and

[[Page 22269]]

persuades regular customers to accept delivery of increased amounts of 
goods or of new products, even though the initial sale or agreement for 
delivery was made by someone else.
    (d) Drivers who generally would not qualify as exempt outside sales 
employees include:
    (1) A route driver whose primary duty is to transport products sold 
by the employer through vending machines and to keep such machines 
stocked, in good operating condition, and in good locations.
    (2) A driver who often calls on established customers day after day 
or week after week, delivering a quantity of the employer's products at 
each call when the sale was not significantly affected by solicitations 
of the customer by the delivering driver or the amount of the sale is 
determined by the volume of the customer's sales since the previous 
delivery.
    (3) A driver primarily engaged in making deliveries to customers 
and performing activities intended to promote sales by customers 
(including placing point-of-sale and other advertising materials, price 
stamping commodities, arranging merchandise on shelves, in coolers or 
in cabinets, rotating stock according to date, and cleaning and 
otherwise servicing display cases), unless such work is in furtherance 
of the driver's own sales efforts.


Subpart G--Salary Requirements


Sec.  541.600  Amount of salary required.

    (a) To qualify as an exempt executive, administrative or 
professional employee under section 13(a)(1) of the Act, an employee 
must be compensated on a salary basis at a rate of not less than $455 
per week (or $380 per week, if employed in American Samoa by employers 
other than the Federal Government), exclusive of board, lodging or 
other facilities. Administrative and professional employees may also be 
paid on a fee basis, as defined in Sec.  541.605.
    (b) The $455 a week may be translated into equivalent amounts for 
periods longer than one week. The requirement will be met if the 
employee is compensated biweekly on a salary basis of $910, semimonthly 
on a salary basis of $985.83, or monthly on a salary basis of 
$1,971.66. However, the shortest period of payment that will meet this 
compensation requirement is one week.
    (c) In the case of academic administrative employees, the 
compensation requirement also may be met by compensation on a salary 
basis at a rate at least equal to the entrance salary for teachers in 
the educational establishment by which the employee is employed, as 
provided in Sec.  541.204(a)(1).
    (d) In the case of computer employees, the compensation requirement 
also may be met by compensation on an hourly basis at a rate not less 
than $27.63 an hour, as provided in Sec.  541.400(b).
    (e) In the case of professional employees, the compensation 
requirements in this section shall not apply to employees engaged as 
teachers (see Sec.  541.303); employees who hold a valid license or 
certificate permitting the practice of law or medicine or any of their 
branches and are actually engaged in the practice thereof (see Sec.  
541.304); or to employees who hold the requisite academic degree for 
the general practice of medicine and are engaged in an internship or 
resident program pursuant to the practice of the profession (see Sec.  
541.304). In the case of medical occupations, the exception from the 
salary or fee requirement does not apply to pharmacists, nurses, 
therapists, technologists, sanitarians, dietitians, social workers, 
psychologists, psychometrists, or other professions which service the 
medical profession.



Sec.  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.
    (b) (1) ``Total annual compensation'' must include at least $455 
per week paid on a salary or fee basis. Total annual compensation may 
also include commissions, nondiscretionary bonuses and other 
nondiscretionary compensation earned during a 52-week period. Total 
annual compensation does not include board, lodging and other 
facilities as defined in Sec.  541.606, and does not include payments 
for medical insurance, payments for life insurance, contributions to 
retirement plans and the cost of other fringe benefits.
    (2) If an employee's total annual compensation does not total at 
least the minimum amount established in paragraph (a) of this section 
by the last pay period of the 52-week period, the employer may, during 
the last pay period or within one month after the end of the 52-week 
period, make one final payment sufficient to achieve the required 
level. For example, an employee may earn $80,000 in base salary, and 
the employer may anticipate based upon past sales that the employee 
also will earn $20,000 in commissions. However, due to poor sales in 
the final quarter of the year, the employee actually only earns $10,000 
in commissions. In this situation, the employer may within one month 
after the end of the year make a payment of at least $10,000 to the 
employee. Any such final payment made after the end of the 52-week 
period may count only toward the prior year's total annual compensation 
and not toward the total annual compensation in the year it was paid. 
If the employer fails to make such a payment, the employee does not 
qualify as a highly compensated employee, but may still qualify as 
exempt under subparts B, C or D of this part.
    (3) An employee who does not work a full year for the employer, 
either because the employee is newly hired after the beginning of the 
year or ends the employment before the end of the year, may qualify for 
exemption under this section if the employee receives a pro rata 
portion of the minimum amount established in paragraph (a) of this 
section, based upon the number of weeks that the employee will be or 
has been employed. An employer may make one final payment as under 
paragraph (b)(2) of this section within one month after the end of 
employment.
    (4) The employer may utilize any 52-week period as the year, such 
as a calendar year, a fiscal year, or an anniversary of hire year. If 
the employer does not identify some other year period in advance, the 
calendar year will apply.
    (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 Sec.  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

[[Page 22270]]

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.



Sec.  541.602  Salary basis.

    (a) General rule. An employee will be considered to be paid on a 
``salary basis'' within the meaning of these regulations if the 
employee regularly receives each pay period on a weekly, or less 
frequent basis, a predetermined amount constituting all or part of the 
employee's compensation, which amount is not subject to reduction 
because of variations in the quality or quantity of the work performed. 
Subject to the exceptions provided in paragraph (b) of this section, an 
exempt employee must receive the full salary for any week in which the 
employee performs any work without regard to the number of days or 
hours worked. Exempt employees need not be paid for any workweek in 
which they perform no work. An employee is not paid on a salary basis 
if deductions from the employee's predetermined compensation are made 
for absences occasioned by the employer or by the operating 
requirements of the business. If the employee is ready, willing and 
able to work, deductions may not be made for time when work is not 
available.
    (b) Exceptions. The prohibition against deductions from pay in the 
salary basis requirement is subject to the following exceptions:
    (1) Deductions from pay may be made when an exempt employee is 
absent from work for one or more full days for personal reasons, other 
than sickness or disability. Thus, if an employee is absent for two 
full days to handle personal affairs, the employee's salaried status 
will not be affected if deductions are made from the salary for two 
full-day absences. However, if an exempt employee is absent for one and 
a half days for personal reasons, the employer can deduct only for the 
one full-day absence.
    (2) Deductions from pay may be made for absences of one or more 
full days occasioned by sickness or disability (including work-related 
accidents) if the deduction is made in accordance with a bona fide 
plan, policy or practice of providing compensation for loss of salary 
occasioned by such sickness or disability. The employer is not required 
to pay any portion of the employee's salary for full-day absences for 
which the employee receives compensation under the plan, policy or 
practice. Deductions for such full-day absences also may be made before 
the employee has qualified under the plan, policy or practice, and 
after the employee has exhausted the leave allowance thereunder. Thus, 
for example, if an employer maintains a short-term disability insurance 
plan providing salary replacement for 12 weeks starting on the fourth 
day of absence, the employer may make deductions from pay for the three 
days of absence before the employee qualifies for benefits under the 
plan; for the twelve weeks in which the employee receives salary 
replacement benefits under the plan; and for absences after the 
employee has exhausted the 12 weeks of salary replacement benefits. 
Similarly, an employer may make deductions from pay for absences of one 
or more full days if salary replacement benefits are provided under a 
State disability insurance law or under a State workers' compensation 
law.
    (3) While an employer cannot make deductions from pay for absences 
of an exempt employee occasioned by jury duty, attendance as a witness 
or temporary military leave, the employer can offset any amounts 
received by an employee as jury fees, witness fees or military pay for 
a particular week against the salary due for that particular week 
without loss of the exemption.
    (4) Deductions from pay of exempt employees may be made for 
penalties imposed in good faith for infractions of safety rules of 
major significance. Safety rules of major significance include those 
relating to the prevention of serious danger in the workplace or to 
other employees, such as rules prohibiting smoking in explosive plants, 
oil refineries and coal mines.
    (5) Deductions from pay of exempt employees may be made for unpaid 
disciplinary suspensions of one or more full days imposed in good faith 
for infractions of workplace conduct rules. Such suspensions must be 
imposed pursuant to a written policy applicable to all employees. Thus, 
for example, an employer may suspend an exempt employee without pay for 
three days for violating a generally applicable written policy 
prohibiting sexual harassment. Similarly, an employer may suspend an 
exempt employee without pay for twelve days for violating a generally 
applicable written policy prohibiting workplace violence.
    (6) An employer is not required to pay the full salary in the 
initial or terminal week of employment. Rather, an employer may pay a 
proportionate part of an employee's full salary for the time actually 
worked in the first and last week of employment. In such weeks, the 
payment of an hourly or daily equivalent of the employee's full salary 
for the time actually worked will meet the requirement. However, 
employees are not paid on a salary basis within the meaning of these 
regulations if they are employed occasionally for a few days, and the 
employer pays them a proportionate part of the weekly salary when so 
employed.
    (7) An employer is not required to pay the full salary for weeks in 
which an exempt employee takes unpaid leave under the Family and 
Medical Leave Act. Rather, when an exempt employee takes unpaid leave 
under the Family and Medical Leave Act, an employer may pay a 
proportionate part of the full salary for time actually worked. For 
example, if an employee who normally works 40 hours per week uses four 
hours of unpaid leave under the Family and Medical Leave Act, the 
employer could deduct 10 percent of the employee's normal salary that 
week.
    (c) When calculating the amount of a deduction from pay allowed 
under paragraph (b) of this section, the employer may use the hourly or 
daily equivalent of the employee's full weekly salary or any other 
amount proportional to the time actually missed by the employee. A 
deduction from pay as a penalty for violations of major safety rules 
under paragraph (b)(4) of this section may be made in any amount.



Sec.  541.603  Effect of improper deductions from salary.

    (a) An employer who makes improper deductions from salary shall 
lose the exemption if the facts demonstrate that the employer did not 
intend to pay employees on a salary basis. An actual practice of making 
improper deductions demonstrates that the employer did not intend to 
pay employees on a salary basis. The factors to consider when 
determining whether an employer has an actual practice of making 
improper deductions include, but are not limited to: the number of 
improper deductions, particularly as compared to the number of employee 
infractions warranting discipline; the time period during which the 
employer made improper deductions; the number and geographic location 
of employees whose salary was improperly reduced; the number and 
geographic location of managers responsible for taking the improper 
deductions; and whether the employer has a clearly communicated policy 
permitting or prohibiting improper deductions.
    (b) If the facts demonstrate that the employer has an actual 
practice of


[[Continued on page 22271]]


From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]                         
 
[[pp. 22271-22274]] Defining and Delimiting the Exemptions for Executive, 
Administrative, Professional, Outside Sales and Computer Employees

[[Continued from page 22270]]

[[Page 22271]]

making improper deductions, the exemption is lost during the time 
period in which the improper deductions were made for employees in the 
same job classification working for the same managers responsible for 
the actual improper deductions. Employees in different job 
classifications or who work for different managers do not lose their 
status as exempt employees. Thus, for example, if a manager at a 
company facility routinely docks the pay of engineers at that facility 
for partial-day personal absences, then all engineers at that facility 
whose pay could have been improperly docked by the manager would lose 
the exemption; engineers at other facilities or working for other 
managers, however, would remain exempt.
    (c) Improper deductions that are either isolated or inadvertent 
will not result in loss of the exemption for any employees subject to 
such improper deductions, if the employer reimburses the employees for 
such improper deductions.
    (d) If an employer has a clearly communicated policy that prohibits 
the improper pay deductions specified in Sec.  541.602(a) and includes 
a complaint mechanism, reimburses employees for any improper deductions 
and makes a good faith commitment to comply in the future, such 
employer will not lose the exemption for any employees unless the 
employer willfully violates the policy by continuing to make improper 
deductions after receiving employee complaints. If an employer fails to 
reimburse employees for any improper deductions or continues to make 
improper deductions after receiving employee complaints, the exemption 
is lost during the time period in which the improper deductions were 
made for employees in the same job classification working for the same 
managers responsible for the actual improper deductions. The best 
evidence of a clearly communicated policy is a written policy that was 
distributed to employees prior to the improper pay deductions by, for 
example, providing a copy of the policy to employees at the time of 
hire, publishing the policy in an employee handbook or publishing the 
policy on the employer's Intranet.
    (e) This section shall not be construed in an unduly technical 
manner so as to defeat the exemption.



Sec.  541.604  Minimum guarantee plus extras.

    (a) An employer may provide an exempt employee with additional 
compensation without losing the exemption or violating the salary basis 
requirement, if the employment arrangement also includes a guarantee of 
at least the minimum weekly-required amount paid on a salary basis. 
Thus, for example, an exempt employee guaranteed at least $455 each 
week paid on a salary basis may also receive additional compensation of 
a one percent commission on sales. An exempt employee also may receive 
a percentage of the sales or profits of the employer if the employment 
arrangement also includes a guarantee of at least $455 each week paid 
on a salary basis. Similarly, the exemption is not lost if an exempt 
employee who is guaranteed at least $455 each week paid on a salary 
basis also receives additional compensation based on hours worked for 
work beyond the normal workweek. Such additional compensation may be 
paid on any basis (e.g., flat sum, bonus payment, straight-time hourly 
amount, time and one-half or any other basis), and may include paid 
time off.
    (b) An exempt employee's earnings may be computed on an hourly, a 
daily or a shift basis, without losing the exemption or violating the 
salary basis requirement, if the employment arrangement also includes a 
guarantee of at least the minimum weekly required amount paid on a 
salary basis regardless of the number of hours, days or shifts worked, 
and a reasonable relationship exists between the guaranteed amount and 
the amount actually earned. The reasonable relationship test will be 
met if the weekly guarantee is roughly equivalent to the employee's 
usual earnings at the assigned hourly, daily or shift rate for the 
employee's normal scheduled workweek. Thus, for example, an exempt 
employee guaranteed compensation of at least $500 for any week in which 
the employee performs any work, and who normally works four or five 
shifts each week, may be paid $150 per shift without violating the 
salary basis requirement. The reasonable relationship requirement 
applies only if the employee's pay is computed on an hourly, daily or 
shift basis. It does not apply, for example, to an exempt store manager 
paid a guaranteed salary of $650 per week who also receives a 
commission of one-half percent of all sales in the store or five 
percent of the store's profits, which in some weeks may total as much 
as, or even more than, the guaranteed salary.



Sec.  541.605  Fee basis.

    (a) Administrative and professional employees may be paid on a fee 
basis, rather than on a salary basis. An employee will be considered to 
be paid on a ``fee basis'' within the meaning of these regulations if 
the employee is paid an agreed sum for a single job regardless of the 
time required for its completion. These payments resemble piecework 
payments with the important distinction that generally a ``fee'' is 
paid for the kind of job that is unique rather than for a series of 
jobs repeated an indefinite number of times and for which payment on an 
identical basis is made over and over again. Payments based on the 
number of hours or days worked and not on the accomplishment of a given 
single task are not considered payments on a fee basis.
    (b) To determine whether the fee payment meets the minimum amount 
of salary required for exemption under these regulations, the amount 
paid to the employee will be tested by determining the time worked on 
the job and whether the fee payment is at a rate that would amount to 
at least $455 per week if the employee worked 40 hours. Thus, an artist 
paid $250 for a picture that took 20 hours to complete meets the 
minimum salary requirement for exemption since earnings at this rate 
would yield the artist $500 if 40 hours were worked.



Sec.  541.606  Board, lodging or other facilities.

    (a) To qualify for exemption under section 13(a)(1) of the Act, an 
employee must earn the minimum salary amount set forth in Sec.  
541.600, ``exclusive of board, lodging or other facilities.'' The 
phrase ``exclusive of board, lodging or other facilities'' means ``free 
and clear'' or independent of any claimed credit for non-cash items of 
value that an employer may provide to an employee. Thus, the costs 
incurred by an employer to provide an employee with board, lodging or 
other facilities may not count towards the minimum salary amount 
required for exemption under this part 541. Such separate transactions 
are not prohibited between employers and their exempt employees, but 
the costs to employers associated with such transactions may not be 
considered when determining if an employee has received the full 
required minimum salary payment.
    (b) Regulations defining what constitutes ``board, lodging, or 
other facilities'' are contained in 29 CFR part 531. As described in 29 
CFR 531.32, the term ``other facilities'' refers to items similar to 
board and lodging, such as meals furnished at company restaurants or 
cafeterias or by hospitals, hotels, or restaurants to their employees; 
meals, dormitory rooms, and tuition furnished by a college to its 
student employees; merchandise furnished at company stores or 
commissaries, including articles of food, clothing, and household 
effects; housing furnished for dwelling purposes; and transportation 
furnished

[[Page 22272]]

to employees for ordinary commuting between their homes and work.


Subpart H--Definitions and Miscellaneous Provisions


Sec.  541.700  Primary duty.

    (a) To qualify for exemption under this part, an employee's 
``primary duty'' must be the performance of exempt work. The term 
``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. 
Factors to consider when determining the primary duty of an employee 
include, but are not limited to, the relative importance of the exempt 
duties as compared with other types of duties; the amount of time spent 
performing exempt work; the employee's relative freedom from direct 
supervision; and the relationship between the employee's salary and the 
wages paid to other employees for the kind of nonexempt work performed 
by the employee.
    (b) The amount of time spent performing exempt work can be a useful 
guide in determining whether exempt work is the primary duty of an 
employee. Thus, employees who spend more than 50 percent of their time 
performing exempt work will generally satisfy the primary duty 
requirement. Time alone, however, is not the sole test, and nothing in 
this section requires that exempt employees spend more than 50 percent 
of their time performing exempt work. Employees who do not spend more 
than 50 percent of their time performing exempt duties may nonetheless 
meet the primary duty requirement if the other factors support such a 
conclusion.
    (c) Thus, for example, assistant managers in a retail establishment 
who perform exempt executive work such as supervising and directing the 
work of other employees, ordering merchandise, managing the budget and 
authorizing payment of bills may have management as their primary duty 
even if the assistant managers spend more than 50 percent of the time 
performing nonexempt work such as running the cash register. However, 
if such assistant managers are closely supervised and earn little more 
than the nonexempt employees, the assistant managers generally would 
not satisfy the primary duty requirement.


Sec.  541.701  Customarily and regularly.

    The phrase ``customarily and regularly'' means a frequency that 
must be greater than occasional but which, of course, may be less than 
constant. Tasks or work performed ``customarily and regularly'' 
includes work normally and recurrently performed every workweek; it 
does not include isolated or one-time tasks.


Sec.  541.702  Exempt and nonexempt work.

    The term ``exempt work'' means all work described in Sec. Sec.  
541.100, 541.101, 541.200, 541.300, 541.301, 541.302, 541.303, 541.304, 
541.400 and 541.500, and the activities directly and closely related to 
such work. All other work is considered ``nonexempt.''


Sec.  541.703  Directly and closely related.

    (a) Work that is ``directly and closely related'' to the 
performance of exempt work is also considered exempt work. The phrase 
``directly and closely related'' means tasks that are related to exempt 
duties and that contribute to or facilitate performance of exempt work. 
Thus, ``directly and closely related'' work may include physical tasks 
and menial tasks that arise out of exempt duties, and the routine work 
without which the exempt employee's exempt work cannot be performed 
properly. Work ``directly and closely related'' to the performance of 
exempt duties may also include recordkeeping; monitoring and adjusting 
machinery; taking notes; using the computer to create documents or 
presentations; opening the mail for the purpose of reading it and 
making decisions; and using a photocopier or fax machine. Work is not 
``directly and closely related'' if the work is remotely related or 
completely unrelated to exempt duties.
    (b) The following examples further illustrate the type of work that 
is and is not normally considered as directly and closely related to 
exempt work:
    (1) Keeping time, production or sales records for subordinates is 
work directly and closely related to an exempt executive's function of 
managing a department and supervising employees.
    (2) The distribution of materials, merchandise or supplies to 
maintain control of the flow of and expenditures for such items is 
directly and closely related to the performance of exempt duties.
    (3) A supervisor who spot checks and examines the work of 
subordinates to determine whether they are performing their duties 
properly, and whether the product is satisfactory, is performing work 
which is directly and closely related to managerial and supervisory 
functions, so long as the checking is distinguishable from the work 
ordinarily performed by a nonexempt inspector.
    (4) A supervisor who sets up a machine may be engaged in exempt 
work, depending upon the nature of the industry and the operation. In 
some cases the setup work, or adjustment of the machine for a 
particular job, is typically performed by the same employees who 
operate the machine. Such setup work is part of the production 
operation and is not exempt. In other cases, the setting up of the work 
is a highly skilled operation which the ordinary production worker or 
machine tender typically does not perform. In large plants, non-
supervisors may perform such work. However, particularly in small 
plants, such work may be a regular duty of the executive and is 
directly and closely related to the executive's responsibility for the 
work performance of subordinates and for the adequacy of the final 
product. Under such circumstances, it is exempt work.
    (5) A department manager in a retail or service establishment who 
walks about the sales floor observing the work of sales personnel under 
the employee's supervision to determine the effectiveness of their 
sales techniques, checks on the quality of customer service being 
given, or observes customer preferences is performing work which is 
directly and closely related to managerial and supervisory functions.
    (6) A business consultant may take extensive notes recording the 
flow of work and materials through the office or plant of the client; 
after returning to the office of the employer, the consultant may 
personally use the computer to type a report and create a proposed 
table of organization. Standing alone, or separated from the primary 
duty, such note-taking and typing would be routine in nature. However, 
because this work is necessary for analyzing the data and making 
recommendations, the work is directly and closely related to exempt 
work. While it is possible to assign note-taking and typing to 
nonexempt employees, and in fact it is frequently the practice to do 
so, delegating such routine tasks is not required as a condition of 
exemption.
    (7) A credit manager who makes and administers the credit policy of 
the employer, establishes credit limits for customers, authorizes the 
shipment of orders on credit, and makes decisions on whether to exceed 
credit limits would be performing work exempt under Sec.  541.200. Work 
that is directly and closely related to these exempt duties may include 
checking the status of accounts to determine whether the credit limit 
would be exceeded by the shipment of a new order, removing credit 
reports from the files for analysis,

[[Page 22273]]

and writing letters giving credit data and experience to other 
employers or credit agencies.
    (8) A traffic manager in charge of planning a company's 
transportation, including the most economical and quickest routes for 
shipping merchandise to and from the plant, contracting for common-
carrier and other transportation facilities, negotiating with carriers 
for adjustments for damages to merchandise, and making the necessary 
rearrangements resulting from delays, damages or irregularities in 
transit, is performing exempt work. If the employee also spends part of 
the day taking telephone orders for local deliveries, such order-taking 
is a routine function and is not directly and closely related to the 
exempt work.
    (9) An example of work directly and closely related to exempt 
professional duties is a chemist performing menial tasks such as 
cleaning a test tube in the middle of an original experiment, even 
though such menial tasks can be assigned to laboratory assistants.
    (10) A teacher performs work directly and closely related to exempt 
duties when, while taking students on a field trip, the teacher drives 
a school van or monitors the students' behavior in a restaurant.


Sec.  541.704  Use of manuals.

    The use of manuals, guidelines or other established procedures 
containing or relating to highly technical, scientific, legal, 
financial or other similarly complex matters that can be understood or 
interpreted only by those with advanced or specialized knowledge or 
skills does not preclude exemption under section 13(a)(1) of the Act or 
the regulations in this part. Such manuals and procedures provide 
guidance in addressing difficult or novel circumstances and thus use of 
such reference material would not affect an employee's exempt status. 
The section 13(a)(1) exemptions are not available, however, for 
employees who simply apply well-established techniques or procedures 
described in manuals or other sources within closely prescribed limits 
to determine the correct response to an inquiry or set of 
circumstances.


Sec.  541.705  Trainees.

    The executive, administrative, professional, outside sales and 
computer employee exemptions do not apply to employees training for 
employment in an executive, administrative, professional, outside sales 
or computer employee capacity who are not actually performing the 
duties of an executive, administrative, professional, outside sales or 
computer employee.


Sec.  541.706  Emergencies.

    (a) An exempt employee will not lose the exemption by performing 
work of a normally nonexempt nature because of the existence of an 
emergency. Thus, when emergencies arise that threaten the safety of 
employees, a cessation of operations or serious damage to the 
employer's property, any work performed in an effort to prevent such 
results is considered exempt work.
    (b) An ``emergency'' does not include occurrences that are not 
beyond control or for which the employer can reasonably provide in the 
normal course of business. Emergencies generally occur only rarely, and 
are events that the employer cannot reasonably anticipate.
    (c) The following examples illustrate the distinction between 
emergency work considered exempt work and routine work that is not 
exempt work:
    (1) A mine superintendent who pitches in after an explosion and 
digs out workers who are trapped in the mine is still a bona fide 
executive.
    (2) Assisting nonexempt employees with their work during periods of 
heavy workload or to handle rush orders is not exempt work.
    (3) Replacing a nonexempt employee during the first day or partial 
day of an illness may be considered exempt emergency work depending on 
factors such as the size of the establishment and of the executive's 
department, the nature of the industry, the consequences that would 
flow from the failure to replace the ailing employee immediately, and 
the feasibility of filling the employee's place promptly.
    (4) Regular repair and cleaning of equipment is not emergency work, 
even when necessary to prevent fire or explosion; however, repairing 
equipment may be emergency work if the breakdown of or damage to the 
equipment was caused by accident or carelessness that the employer 
could not reasonably anticipate.


Sec.  541.707  Occasional tasks.

    Occasional, infrequently recurring tasks that cannot practicably be 
performed by nonexempt employees, but are the means for an exempt 
employee to properly carry out exempt functions and responsibilities, 
are considered exempt work. The following factors should be considered 
in determining whether such work is exempt work: Whether the same work 
is performed by any of the exempt employee's subordinates; 
practicability of delegating the work to a nonexempt employee; whether 
the exempt employee performs the task frequently or occasionally; and 
existence of an industry practice for the exempt employee to perform 
the task.


Sec.  541.708  Combination exemptions.

    Employees who perform a combination of exempt duties as set forth 
in the regulations in this part for executive, administrative, 
professional, outside sales and computer employees may qualify for 
exemption. Thus, for example, an employee whose primary duty involves a 
combination of exempt administrative and exempt executive work may 
qualify for exemption. In other words, work that is exempt under one 
section of this part will not defeat the exemption under any other 
section.


Sec.  541.709  Motion picture producing industry.

    The requirement that the employee be paid ``on a salary basis'' 
does not apply to an employee in the motion picture producing industry 
who is compensated at a base rate of at least $695 a week (exclusive of 
board, lodging, or other facilities). Thus, an employee in this 
industry who is otherwise exempt under subparts B, C or D of this part, 
and who is employed at a base rate of at least $695 a week is exempt if 
paid a proportionate amount (based on a week of not more than 6 days) 
for any week in which the employee does not work a full workweek for 
any reason. Moreover, an otherwise exempt employee in this industry 
qualifies for exemption if the employee is employed at a daily rate 
under the following circumstances:
    (a) The employee is in a job category for which a weekly base rate 
is not provided and the daily base rate would yield at least $695 if 6 
days were worked; or
    (b) The employee is in a job category having a weekly base rate of 
at least $695 and the daily base rate is at least one-sixth of such 
weekly base rate.


Sec.  541.710  Employees of public agencies.

    (a) An employee of a public agency who otherwise meets the salary 
basis requirements of Sec.  541.602 shall not be disqualified from 
exemption under Sec. Sec.  541.100, 541.200, 541.300 or 541.400 on the 
basis that such employee is paid according to a pay system established 
by statute, ordinance or regulation, or by a policy or practice 
established pursuant to principles of public accountability, under 
which the employee accrues personal leave and sick leave and which 
requires the public agency employee's pay to be reduced or such 
employee to be placed on leave without pay for absences for personal 
reasons or because

[[Page 22274]]

of illness or injury of less than one work-day when accrued leave is 
not used by an employee because:
    (1) Permission for its use has not been sought or has been sought 
and denied;
    (2) Accrued leave has been exhausted; or
    (3) The employee chooses to use leave without pay.
    (b) Deductions from the pay of an employee of a public agency for 
absences due to a budget-required furlough shall not disqualify the 
employee from being paid on a salary basis except in the workweek in 
which the furlough occurs and for which the employee's pay is 
accordingly reduced.

[FR Doc. 04-9016 Filed 4-20-04; 10:40 am]

BILLING CODE 4510-27-P