Exempt vs Non-Exempt Employees
The federal Fair Labor Standards Act (FLSA) requires that in addition to paying at least the minimum wage you also must pay overtime to employees who work more than 40 hours in a given workweek, unless they meet certain exceptions. Most workers are classified as either exempt or non-exempt depending on their salary and they type of work they do.
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.
State-by-state comparison of 50 employment laws in all 50 states
Related articles on Exempt vs Non-Exempt Employees
Exempt vs Non-Exempt Employees tools for Employment Law Letter subscribers
What's your HR IQ on Exempt vs Non-Exempt Employees?
Definition of non-exempt employee
Most employees are entitled to overtime pay under the FLSA. They are called non-exempt employees. You 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.
Audit your wage and hour and employee classification policies and practices with the Employment Practices Self-Audit Workbook
Definition of exempt employee
You don't have to pay overtime to employees who are exempt from the FLSA's overtime provisions. 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. Many overtime mistakes occur when the employer misclassifies a non-exempt employee as exempt.
Learn more about correctly classifying your workers in the Wage and Hour Compliance Manual
Other classifications of employees
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.
Audio Conference: Overcoming the 8 Toughest Wage & Hour Problems: How to Avoid DOL's Ramped-up Enforcement
Other issues to consider
- Comp time. Although there are exceptions, it's usually illegal to give non-exempt employees comp time (time off) instead of paying them overtime.
- Child labor. Federal and state laws include special provisions to protect workers younger than 18. These laws can affect the type of work, wages, and hours that an employee can work.
- Breaks. Employers need to make sure they follow federal and state law requirements regarding breaks, including meal breaks, for workers.
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.
HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including overtime and FLSA employee classifications and exemptions
View all HR topics
Related articles on Exempt vs Non-Exempt Employees from HR Hero Line
- Tenth Circuit Reaffirms Importance of Handbook Disclaimers
(Wyoming Employment Law Letter, January 2010)
- Tips for Minimizing Risk When Cutting Labor Costs
(Colorado Employment Law Letter, December 2009)
- Beware Making Deductions for Lost or Stolen Property from Exempt Employees' Pay
(Oklahoma Employment Law Letter, November 2009)
- Telecommuting: Tips for Managing Employees Who Work From Home
(New York Employment Letter, September 2009)
- Sixth Circuit Addresses Salary Basis Test under FLSA
(Ohio Employment Law Letter, July 2009)
- DOL's Renewed Focus: Wage and Hour Enforcement
(Vermont Employment Law Letter, July 2009)
- Sonia Sotomayor’s District Court Decisions Dealing with the Fair Labor Standards Act
(The Word on Employment Law, June 2009)
- Take a Vacation from Smartphones and Overtime Laws
(HR Insight, June 2009)
- Comp Time in the Private Sector
(West Virginia Employment Law Letter, May 2009)
- Recent opinion letters from the DOL's Wage and Hour Division
(Alabama Employment Law Letter, May 2009)
- Legal Issues with Independent Contractors Plugged into Your Electronic Resources
(HR Insight, May 2009)
- Practical Job Descriptions Benefit Employees and Employers
(California Employment Law Letter, April 2009)
- Furloughs and Reduced-Hour Schedules as Alternatives to Layoffs
(Nevada Employment Law Letter, April 2009)
- DOL Issues Opinion Letter on Wage and Hour Issues for Mandatory Unpaid Time Off
(Florida Employment Law Letter, April 2009)
- Update on the Employee Misclassification Prevention Act
(Delaware EmploymentLaw Letter, March 2009)
- Beware Misclassifying Workers as Exempt Administrative Employees
(Indiana Employment Law Letter, February 2009)
- Cutting Corners when Cutting Employee's Hours Can Cost Employers in the Long Run
(Texas Employment Law Letter, February 2009)
- Make Sure Your Payroll Practices are Compliant
(West Virginia Employment Law Letter, December 2008)
- Avoiding Legal Pitfalls during RIFs and when Reducing Workers' Hours
(Missouri Employment Law Letter, October 2008)
- Correctly Classifying IT Employees as Exempt or Non-Exempt
(Tennessee Employment Law Letter, October 2008)
- Primer on Travel Time Pay for Workers
(Wisconsin Employment Law Letter, September 2008)
- Payroll Deductions that Don't Affect Exempt Status
(Michigan Employment Law Letter, August 2008)
- Legal Issues when Reducing Employees Hours, Pay
(Tennessee Employment Law Letter, August 2008)
- BlackBerry® and iPhone® Use May Lead to Overtime
(New York Employment Law Letter, August 2008)
- Correctly Classifying a Worker as an Independent Contractor
(New York Employment Law Letter, June 2008)
- Overtime and Wage Lawsuits: Potential Liability for Most Employers
(Georgia Employment Law Letter, June 2008)
- When Must Employers Pay for Travel Time?
(West Virginia Employment Law Letter, May 2008)
- Preventing Unauthorized Overtime by Employees Who Work from Home
(West Virginia Employment Law Letter, March 2008)
- Wage and Hour Compliance Essentials for Employers
(Tennessee Employment Law Letter, February 2008)
- Flexible Workplace Programs Promote Work-Life Balance
(North Dakota Employment Law Letter, January 2008)
- Retail Sales Exemption to Federal Wage Law
(Tennessee Employment Law Letter, January 2008)
- Employees Told Not to Report Overtime: How Can the Company Avoid Legal Trouble?
(Arizona Employment Law Letter, November 2007)
- Just Say No to Comp Time
(Tennessee Employment Law Letter, October 2007)
- What Employers Can - and Can't - Do When Workers Lose, Destroy Company Equipment
(West Virginia Employment Law Letter, October 2007)
- Traders, Geeks, and Managers: Who Gets Overtime?
(Louisiana Employment Law Letter, February 2007)
- Pay, Time Off Issues for Office Closings Due to Inclement Weather
(Indiana Employment Law Letter, February 2007)
- No Pay for Employees on Snow Day?
(Nebraska Employment Law Letter, February 2005)
HR Tools for Exempt & Non-Exempt Employees
|
