Wage and Hour Blog
Highly Compensated Employee, Learned Professional Exemption

Highly Compensated Employee, Learned Professional Exemption

The Wage and Hour Division (WHD) of the United States Department of Labor (DOL) recently issued an opinion letter that addresses questions regarding the learned professional exemption and the highly compensated employee exemption.

The company who requested the opinion letter is engaged in executive education for a variety of companies that help deliver educational programs to client companies, operate interactive models, and evaluate results of participant activities. Its employees focus on development work that creates new content and interactive models for the programs—most of whom work part-time, holding a master’s degree in finance, accounting, adult learning, or “business discipline.” In addition, the employees are required to have at least 10 years of practical business experience in an executive leadership role and “deep hands-on experience in Microsoft Word, PowerPoint, and Excel, including VBA programming.” Employees receive a flat, daily rate of $1,500 for their delivery work and $50 per hour for their development work. In addition, employees receive pay only during weeks in which they perform work.

Based on these facts, the company posed the following questions:

Are the employees’ primary duties those of learned professionals under 29 C.F.R. § 541.301?

The DOL concluded that these employees perform exempt learned professional duties, which are duties that require advanced knowledge in a field of science or learning that is customarily acquired by a prolonged course of specialized intellectual instruction.

The DOL noted that advanced knowledge involves work that is “predominantly intellectual in character;” this starkly contrasts to any work performed via routine mental, manual, mechanical, or physical labor. The employee’s primary duty here is “delivery work,” and the primary duties of exempt learned professionals are lecturing, presenting, critiquing, and evaluating executives’ responses. These tasks, by their very nature, require exercising discretion and judgement—meeting the criteria of advanced knowledge.

With respect to the requirement for advanced knowledge to be within a field of science or learning that is customarily accounting, teaching, and actuarial computation, the DOL noted these employees taught advanced finance-and-business-related materials to executives. With the employees contributing to teaching advanced finance- and business-related materials to executives and evaluating and quantifying executives’ work, this distinguishes them from employees in the mechanical arts or skilled trades who wouldn’t qualify for learned professional duties because of the nature of their profession. The DOL found that advanced knowledge required to perform such duties is in a field of science or learning.

Lastly, the DOL found that these employees qualify for the “specialized academic training” prerequisite as the employees at the company are required to have a master’s degree in finance, accounting, adult learning,” or a “business discipline.”

Do the company’s payments for delivery work satisfy the salary basis requirement of 29 C.F.R. § 541.300(a)(1) for the learned professional exemption?

The employee must receive a fixed and predetermined salary that is all or part of the employee’s compensation on a weekly or less frequent basis in order to meet the salary basis requirements. In addition, the salary cannot be reduced based on variations in the number of hours worked or the quality of worked performed. 29 C.F.R. § 541.602(a)

The DOL concluded that because of their delivery work payments, these employees do not meet the requirements. They may be paid as low as $1,500 during a workweek in which an employee performs one day of work or they may be more than $10,000 per week.

dditionally, payments are calculated based on the number of days worked and not a weekly or less frequent basis. Instead, these employees’ salaries are determined by the number of days worked; not a fixed salary that is not subject to reduction from variations in the quantity or quality of work performed.

In reaching its conclusion, the DOL also referenced a Fifth Circuit case that addressed a similar question. In that case, the Court held that the salary basis test requires employees know the amount of compensation for each weekly pay period prior to each workweek. The Court further noted that in order for the exemption to apply, employees must receive a full salary for any week in which they perform any work without regard to the number of days or hours worked.

Do the development work payments affect the status of an otherwise exempt employee?

The company then asked the DOL if the employees are “otherwise exempt,” would development work payments affect their status as exempt? The DOL concluded that such payments would not impact their exempt status; this is because the regulation provides that employees receive the minimum required salary each workweek on a salary basis. An employer may pay the employee the additional compensation based on a “commission, flat, bonus, straight-time, or other basis,” which would include a per-hour payment for each hour of development work performed.

However, the DOL noted that the employees at this company are not paid on a salary basis, so the question is moot under the circumstances and facts presented.

Do proportional payments to part-time employees satisfy the highly compensated employee test?

The DOL sorted its analysis by noting that to qualify as exempt under the highly compensated employee test, an employee must receive the minimum salary of $684 per week, on a salary or fee basis and annual compensation of $107,432. However, the DOL discussed an exception to this general rule from FLSA regulations: an employee who begins work after the start of the year and who leaves work before the end of the year may be paid total compensation that is proportional to the amount of the year that the employee worked for the employer.

Despite this exception, the DOL reasoned it did not apply to part-time employees. This is because the regulation does not mention, or provide for, an exception specific to part-time employees. Accordingly, the DOL concluded “an employee satisfies the highly compensated employee test only by satisfying in full the weekly and annual compensation requirements.” The regulation includes no exceptions for part-time employees; an employee satisfies the highly compensated employee test only by satisfying in full the weekly and annual compensation requirements.


The applicability of Exemptions under the FLSA can be highly fact-specific and complicated. The attorneys with our firm endeavor to stay abreast of these opinion letters and other legal developments in order to understand the DOL’s ongoing view of wage and hour issues. More developments to come.