--- name: flsa-exemption-test source: https://app.decimal.ai/s/flsa-exemption-test@1/SKILL.md source_sha256: c6ac34e65919 --- # Classify a role as overtime-exempt only when all three prongs pass Handed a salaried employee and asked whether they owe overtime, the base model reaches for a single shortcut: **salaried means exempt**. That instinct is wrong on both ends. It calls a salaried assembly worker exempt (their duties are manual), and it calls a well-paid hourly manager exempt (they are not paid on a salary basis at all). And when a role *is* non-exempt, the base model rarely names **why** — which is the actionable part. Exemption from overtime under the FLSA white-collar rules is a **three-part** test, and a role is exempt **only when all three parts pass**. Fail any one and the role is **non-exempt** (overtime-eligible). ## Contract You are given one role: its pay structure (salary or hourly), the amount (weekly or annual), and what the person primarily does. Decide whether the role is exempt from overtime. Answer **YES only when all three prongs below are satisfied**; otherwise answer **NO** and name the **single prong that fails** — `salary_basis`, `salary_level`, or `duties`. When the answer is YES, the failed prong is `none`. ## The three prongs (all required for exempt) 1. **Salary basis** — the person is paid a **fixed, predetermined salary** that does not vary with hours worked. Paid by the hour → this prong **fails**, and hourly pay is non-exempt **no matter how high the hourly rate is**. 2. **Salary level** — that salary is **at or above the standard threshold of $684 per week ($35,568 per year)**. Below it → this prong **fails**, even for a genuine manager. *(29 CFR Part 541, US Dept. of Labor; standard salary level effective 2020-01-01. The threshold is inclusive: exactly $684/week passes.)* 3. **Duties** — the person's **primary duties are genuinely executive, administrative, or professional**. Any one of these qualifies: - **Executive** — manages the enterprise or a department, **customarily directs the work of two or more full-time employees**, and has real authority (or influential input) over hiring and firing. - **Administrative** — office/non-manual work directly related to management or general business operations, **exercising discretion and independent judgment on matters of significance**. - **Professional** — work requiring **advanced knowledge** in a field of science or learning, typically from prolonged specialized instruction (attorney, engineer, pharmacist, architect, and the like). - Routine, repetitive, manual, or purely clerical work that follows fixed instructions with no independent judgment **does not qualify** — this prong **fails** even at a high salary. > **Why $684 is still the number (as of 2026-07):** $684/week is the 2019 rule's standard salary level. The Department of Labor's 2024 rule raised it to $844 (July 2024) and then $1,128 (January 2025), but that rule was **vacated nationwide** by the U.S. District Court for the Eastern District of Texas in November 2024, restoring the 2019 level as the operative federal threshold. The vacatur is under appeal — re-verify before relying on the figure, and note that some states set higher thresholds of their own. ## Reporting order when more than one prong fails A role can fail more than one prong at once (an underpaid hourly clerk fails all three). Report the failing prong in this fixed order of precedence and name the **first** one that fails: 1. `salary_basis` (is it even a salary?), then 2. `salary_level` (is the salary high enough?), then 3. `duties` (do the duties qualify?). Rationale: if there is no salary at all, the salary *level* is undefined, so `salary_basis` is the primary defect; duties only become the deciding factor once the pay prongs are both satisfied. ## Worked examples (base default → correct) **Executive, clearly exempt.** A marketing director earns a flat $1,500-a-week salary, runs a team of five, and hires and fires. All three prongs pass (salary basis ✓, above $684 ✓, executive duties ✓). - Base default: exempt (correct here, for the wrong reason — "she's salaried"). - Correct: `{"exempt": "YES", "failed_prong": "none"}` **Salaried but below the threshold.** A restaurant assistant manager takes home a flat $620 weekly salary and genuinely manages the floor and the crew. Salary basis ✓, but $620 sits **below $684** → salary level fails. Real duties don't rescue an under-threshold salary. - Base default: exempt ("salaried manager"). - Correct: `{"exempt": "NO", "failed_prong": "salary_level"}` **Highly paid, but hourly.** A bartender-turned-shift-lead earns $30 an hour and supervises the bar staff. Because pay is hourly, the salary-basis prong fails **before** amount or duties even matter. - Base default: exempt ("makes good money, runs the bar"). - Correct: `{"exempt": "NO", "failed_prong": "salary_basis"}` **Salaried, above threshold, but manual duties.** A warehouse picker draws a flat $1,100 weekly salary and spends the shift pulling and packing orders by hand, supervising no one. Salary basis ✓ and salary level ✓, but the duties are routine manual work → duties fails. - Base default: exempt ("salaried, and paid well"). - Correct: `{"exempt": "NO", "failed_prong": "duties"}` **Fails everything — report the first.** A dishwasher earns $11 an hour and washes dishes. Hourly (basis fails), under threshold (level fails), manual (duties fails). By the precedence order, report the first. - Correct: `{"exempt": "NO", "failed_prong": "salary_basis"}` ## Edge cases - **Exactly at the threshold.** A salary of exactly $684/week (or $35,568/year) **meets** the salary-level prong — it is "at or above," inclusive. $683/week does not. - **High hourly rate.** A $60/hour specialist is still **non-exempt** on the basis prong. High pay never converts hourly into exempt; only a true salary can satisfy the basis prong. - **Only one direct report.** The executive duty requires directing **two or more** employees. A salaried lead who oversees a single person does not meet the executive duty on that basis alone. - **Manager paid below threshold.** Genuine management duties do not cure a sub-$684 salary — it is still non-exempt on `salary_level`. - **Salaried but scripted/routine.** A salaried worker who only applies fixed rules with no discretion fails the **duties** prong even at a comfortable salary. - **Owner/officer, professionals without a license nuance, and highly-compensated shortcuts** exist in the full regulation; when a role clearly fails one of the three basic prongs, that failure decides it regardless. ## Do / Don't - **Do** check all three prongs before answering YES — salaried is a necessary condition, not a sufficient one. - **Don't** treat any hourly worker as exempt, no matter how high the rate. - **Do** compare the weekly-equivalent salary against $684/week (annual ÷ 52) before trusting the duties. - **Don't** let impressive duties override a below-threshold salary or an hourly pay structure. - **Do** name the first failing prong in the precedence order basis → level → duties. - **Don't** answer `none` for a non-exempt role, or name a prong for an exempt one. ## Common mistakes (the base's wrong defaults) - **"Salaried ⇒ exempt."** The single biggest error. Salaried roles below $684/week, and salaried roles doing manual/clerical work, are **non-exempt**. - **"Well paid ⇒ exempt."** A high hourly rate is still hourly; the basis prong fails. - **Ignoring duties entirely.** A salaried, above-threshold line worker or data-entry clerk is **non-exempt** on duties. - **Right verdict, wrong reason.** Even when NO is correct, the base often can't name which prong failed — the reporting order above makes it deterministic. - **Off-by-one on the threshold.** $684/week is **in**; $683/week is **out**. The boundary is inclusive. ## Quick checklist 1. Paid a fixed salary? No → `NO / salary_basis`. 2. Salary ≥ $684/week ($35,568/year)? No → `NO / salary_level`. 3. Primary duties executive, administrative, or professional? No → `NO / duties`. 4. All three yes → `YES / none`.