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HR Disciplines Exempt vs Non-Exempt Employees

HR Consultant 2011.11.28 01:58 Views : 658

Most workers are classified as either exempt or non-exempt depending on their salary and the type of work they do. The federal Fair Labor Standards Act (FLSA) requires that in addition to paying at least the minimum wage employers also must pay overtime to employees who work more than 40 hours in a given workweek, unless they meet certain exceptions. To complicate matters further, many states have wage and hour laws that may have more requirements than the FLSA. Employers must make sure they abide by both federal and state wage and hours laws to avoid legal trouble.

In addition to regular non-exempt employees and exempt employees, there are several other classifications of workers. It's important to make sure that those workers actually meet the requirements for those classifications in the FLSA and your state's wage and hour laws. Other classifications include volunteers, trainees, interns, independent contractors, and temporary employees.

 

Definition of non-exempt employee
Most employees are entitled to overtime pay under the Fair Labor Standards Act. They are called non-exempt employees. Employers must pay them one-and-a-half times their regular rate of pay when they work more than 40 hours in a week. The biggest problem most employers have with nonexempt employees is miscalculating how much overtime workers are owed.

 

Definition of exempt employee
The Fair Labor Standards Act contains dozens of exemptions under which specific categories of employers and employees are exempted from overtime requirements. The most common exemptions are the white-collar exemptions for administrative, executive, and professional employees, computer professionals, and outside sales employees. There is a also a lesser known exemption for certain retail or service organizations. The primary advantages of classifying employees as exempt are that you don't have to track their hours or pay them overtime, no matter how many hours they work.

Obviously, this is an appealing scenario for employers. However, exemptions from the overtime requirements of the FLSA are just that -- exceptions to the rule. They are very narrowly construed, and as the employer, you will always bear the burden of proving that you have correctly classified an employee as exempt.

 

 

Wage and hour law enforcement
The provisions of the FLSA are interpreted and enforced by the U.S. Department of Labor which investigates complaints and sometimes sues when it find violations. Many states also have agencies that enforce state labor laws and investigate complaints.

 

      EXEMPT

          Exempt executives generally decide when to perform nonexempt duties and remain responsible for the success or failure of business operations.

          Factors include, but are not limited to:

          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

          Whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances

          NON-EXEMPT

          Nonexempt employees generally are directed by a supervisor to perform the exempt work or perform the exempt work for defined time periods.

          Discretion and independent judgment does not include:

          Applying well-established techniques, procedures or specific standards described in manuals or other sources

          Clerical or secretarial work

          Recording or tabulating data

          An employee who leads a team of other employees assigned to complete major projects

          Executive assistant or administrative assistant to a business owner or senior executive of a large business who has been delegated authority regarding matters of significance

          Management consultants who study the operations of a business and propose changes in organization

          Performing mechanical, repetitive, recurrent or routine work

          Concurrent performance of exempt and nonexempt work does not automatically disqualify an employee from exemption.

          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

          Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

          The comparison and evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered

          Must be exercised with respect to “matters of significance,” which refers to the level of importance or consequence of the work performed

          Discretion and independent business judgment

          Decisions and recommendations may be reviewed at a higher level and, upon occasion, revised or reversed

          Predominantly intellectual in character

          Includes work requiring the consistent exercise of discretion and judgment

          The advanced knowledge is generally used to analyze, interpret or make deductions from varying facts or circumstances

          Not work involving routine mental, manual, mechanical, or physical work

          Cannot be attained at the high school level

          The learned professional exemption is not available for occupations that may be performed with:

          Only the general knowledge acquired by an academic degree in any field

          Knowledge acquired through an apprenticeship

          Training in the performance of routine mental, manual, mechanical or physical processes

          Creative professional exemption

          The exemption also does not apply to occupations in which most employees acquire skill by experience

          The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor

 

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** 상기 내용에 따른 모든 Liability 본인에게 있음을 알려드립니다.

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