Friday, April 15, 2011

Exempt or Non-Exempt?

The last thing any job hunter wants is a problematic job offer. One of the problems employers bring on themselves is mis-classifying employees as “exempt” instead of “non-exempt.”  The law says that certain employees are exempt from minimum wage and overtime requirements; in some cases, employers erroneously classify employees as exempt when their jobs don’t qualify for exemption.

Some employees, such as those performing certain advanced computer-related jobs, outside salespeople, and professionals like doctors and lawyers are automatically exempt. There are two groups of employees, though – production and administrative – whose members can be either exempt from being paid for overtime, or non-exempt.  The determination is based on their pay level, the basis on which they’re paid, and the nature of their duties.

Who’s exempt and who’s not?

Most production and administrative workers are non-exempt. They’re paid by the hour for time worked, and are entitled to be paid for their overtime.  Supervisors and certain other administrative employees are exempt if they pass all of the following tests:

Salary level: exempt supervisors and administrative staff must be paid at least $455 (gross) per week.

Salary basis: the employee receives that salary for every week actually worked, regardless of the number of hours spent on the job. The salaried employee cannot be docked for tardiness, or for leaving work early, or for taking a long lunch.  An employer who docks an exempt employee’s pay for such reasons is basically acknowledging that the employee is actually hourly, paid for time worked, and thus entitled to overtime. The employer may, however, require any number of hours, or days, in a workweek, but generally may not reduce an exempt employee’s salary.

must actually supervise at least two (2) workers, and
must have the power to hire and fire those they supervise.

Exempt administrative staff:
primary duties must involve their employer’s general business operations or their management, or those of their employer’s customers, and
they must routinely exercise independent judgment and discretion concerning matters of significance.

This last point is critical, and also is most frequently misunderstood.  It means that exempt administrative employees are active participants in the employer’s decision-making process, involving decisions far beyond who brews the coffee or what brand of toilet paper is used.  They may be instrumental in the establishment of company policy and its interpretation and enforcement, for example, or may make customer service decisions that override established policy in exigent circumstances.  Administrative workers whose jobs don’t qualify as exempt are entitled to overtime pay.

What if you’re offered a non-exempt job that’s classified as exempt?

Job applicants, of course, are most interested in being hired, not in locking horns with prospective employers over overtime.  Nevertheless, applicants offered what appear to be non-exempt jobs with an “exempt” classification should be careful when accepting such positions, and should document their hours and activities accurately just in case such documentation is required down the road.

- Dale

After a long career in Human Resources in both exempt and non-exempt positions, Dale is currently a business consultant and writer in Metropolitan Atlanta.

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