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Exempt VS Non-exempt Employees

Published: May 5, 2016

Depending on salary and type of work, most workers can be classified as either exempt or non-exempt.  With the upcoming amendments to the FSLA coming quick, this blog with look at the two classifications in detail following last weeks’ post on how to prepare for these changes.  Not only does the FSLA have certain pay requirements for these two, but many states have specific wage and hour laws in regards to these classifications as well.  With all the different classifications of workers, these two are the most vital to collect and analyze before the changes come into effect.

Non-exempt employee

Non-exempt employees are paid an hourly rate for all hours worked and their job duties do not meet any of the exemption tests.  Most employees are entitled to overtime.  Under the FSLA, all non-exempt employees are entitled to overtime of 1.5 their “regular rate” of pay for each hour they incur overtime once they work more than 40 hours per week.  The key is to have a time tracking system in place so there aren’t any miscalculations in the actual overtime owed.  Employers are able to require these employees to clock in and out or work a particular schedule so that they can adhere to the regulations.  They must however keep track of actual hours worked to ensure compliance.

Exempt employee

Exempt employees are paid on a fixed salary and their job duties meet one of the FSLA exemption tests. The FSLA also has a variety of exemptions where employers are exempted from paying overtime requirements. The most common are the “white-collar” exemptions for professional, computer, administrative, executive, and outside sales employees. It may seem appealing for employers to have more exempt workers as there are no overtime headaches, but this is only in the scenario that these employees have been correctly classified and the employer went through their due diligence in proving exemption.

Ensuring that your entire organization is classified properly will help with the upcoming FSLA amendments. With the current proposal, it is vital to prepare how the new salary limit can impact your workforce and bottom line.

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