U.S. Department of Labor 

Employment Standards Administration 

Wage and Hour Division 

 (Revised July 2008) 

Fact Sheet #17H: Highly-Compensated Workers and the Part 541-Exemptions 

Under the Fair Labor Standards Act (FLSA) 

The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all 

hour worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 in a 

workweek. However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and 

overtime pay for employees employed as bona fide executive, administrative, professional and outside sales

employees. Section 13(a)(1) and Section 13(a)(17) also exempts certain computer employees. To qualify for 

exemption, employees must meet certain tests regarding their job duties and be paid on a salary basis at not less 

than $455 per week. 

Highly-Compensated Workers 

The regulations contain a special rule for “highly-compensated” workers who are paid total annual 

compensation of $100,000 or more. A highly compensated employee is deemed exempt under Section 13(a)(1) 

if: 

1. The employee earns total annual compensation of $100,000 or more, which includes at least $455 per 

week paid on a salary basis; 

2. The employee’s primary duty includes performing office or non-manual work; and 

3. The employee customarily and regularly performs at least one of the exempt duties or responsibilities of 

an exempt executive, administrative or professional employee. 

Thus, for example, an employee may qualify as an exempt highly-compensated executive 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 in the standard test for exemption as an executive. 

Total Annual Compensation 

The required total annual compensation of $100,000 or more may consist of commissions, nondiscretionary 

bonuses and other nondiscretionary compensation earned during a 52-week period, but does not include credit 

for board or lodging, payments for medical or life insurance, or contributions to retirement plans or other fringe 

benefits. 

Make-up Payments and Prorating 

There are special rules for prorating the annual compensation if employees work only part of the year, and 

which allow payment of a single lump-sum, make-up amount to satisfy the required annual amount at the end of 

the year and similar make-up payments to employees who terminate before the year ends. 

Customarily and Regularly 

“Customarily and regularly” means greater than occasional but may be less than constant, and includes work 

normally and recurrently performed every workweek but does not include isolated or one-time tasks. 
Where to Obtain Additional Information 

For additional information, visit our Wage and Hour Division Website: http://www.wagehour.dol.gov

and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-

4USWAGE (1-866-487-9243). 

This publication is for general information and is not to be considered in the same light as official statements of 

position contained in the regulations. 

U.S. Department of Labor

Frances Perkins Building 

200 Constitution Avenue, NW 

Washington, DC 20210 

1-866-4-USWAGE

 TTY: 1-866-487-9243

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