It's up to you to determine whether to classify an employee as exempt or nonexempt under the Fair Labor Standards Act (FLSA).
The key consideration: Exempt workers aren't eligible for overtime pay. Rather, they're paid for the job they do, not the hours they keep.
If you have doubts about how to classify employees, educate yourself: Exempt or Nonexempt? How to Make the Call and Avoid FLSA Overtime Lawsuits
To comply with the FLSA, employers need to regularly review their employee classifications. Generally, two requirements must be met for an employee to be exempt from overtime pay:
1) they must earn a salary and
2) hold a position with duties the U.S. Labor Department designates as appropriate for exempt positions.
Those positions generally fall into six categories:
3. Learned professional
4. Computer professional
5. Creative professional
6. Outside sales
But it's not that simple. For example, employees who earn a salary of less than $455 a week ($23,660 annually) now automatically qualify for overtime pay. Previously, the law set the salary threshold at a ridiculously outdated $8,060.
If an employee meets the salary test, he/she must also meet the “duties test” to be considered exempt. The duties tests are based on the employee's specific job duties.
Remember: Job titles do not determine exempt status.
Exempt or Nonexempt? How to Make the Call walks you step-by-step through the classification process, alerts you to the 10 most common employer mistakes, and outlines 6 compliance tips to give you peace of mind. You'll get answers to your most vexing overtime pay questions, like:
Are hourly bonuses OK for salaried employees?
Does exemption class matter for part-time employees?
Can we legally convert all employees to nonexempt?
Does extra holiday pay endanger exempt status?
Comp time for exempt workers: Is this a slippery slope?
Should we track hours of straight-commission workers?
Is a mandatory 45-hour week allowed for exempt staff?
Can we change the status of an hourly ‘working’ supervisor?
Can we require salaried staff to make up lost time?
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