Legal Requirements for Exempt Employees

The administrative exemption is aimed at relatively high-level employees whose main task is to “keep the business in business”. A useful rule of thumb is to distinguish between administrative staff and “operational” or “production” staff. The employees who do what the company sells are not administrative employees. Administrative staff “support” operating or production staff. They are “employees” rather than “line employees”. Examples of administrative functions include labour relations and human resources (human resources), payroll and finance (including budgeting and benefits management), record keeping, accounting and taxation, marketing and advertising (as opposed to direct sales), quality control, public relations (including shareholder or investment relations and government relations), legal and regulatory compliance, and certain computer-related tasks (for example, network, Internet and database management). (See IT staff.) In each workplace, there are two types of workers: exempt workers and non-exempt workers. Exempt workers are those who are exempt from minimum wage and overtime pay requirements. This is because exempt employees receive a salary, not an hourly wage, and are in managerial or professional positions. Exempt employees often receive year-end bonuses to compensate for the type of work they do, as well as for overtime. Q: Is the status of FLSA (exempt/non-exempt) considered final or can decisions be challenged or modified based on management`s comments? A: The status of the FLSA has been established for each title. However, individual positions or benefits may require analysis through compensation to ensure that each position is assigned to the appropriate classification.

As always, items must conform to the definitions of the serial concept in order to be reclassified. Items are not reclassified to avoid overtime. With few exceptions, a salaried employee`s base salary cannot be reduced based on the “quality or quantity” of the work performed (provided the employee does “some” work during working hours). This generally means that the basic salary of an employee cannot be reduced if he does less work than normal if the reason for doing so is determined by the employer. For example, an employee`s base salary cannot be reduced if there is “no work” to be done (e.g., for a plant closure or off-peak period), and the base salary of a base salary employee cannot be reduced for part-time absences. However, employers may “lock-in” employees` base pay on a full-day salary basis, for disciplinary suspensions or personal leave, or for sick leave under a bona fide sick leave schedule (e.g., if the employee has no longer accumulated sick leave). Employers are not required to pay overtime to employees who are duly considered exempt. However, you can choose to compensate these individuals for overtime under benefit plans. Sometimes reclassification is necessary, but even that carries risks. For example, an exempt employee who is classified as exempt may be upset that he no longer receives overtime pay, while an exempt employee who is classified as non-exempt may perceive the change as a reduction in prestige. Before reclassifying employees, employers should explain the law to them and emphasize that they have done nothing wrong. This type of open communication can help prevent low morale.

In addition to the main categories of exempted workers, other categories of workers may be considered exempt from paying overtime. These include agricultural workers; film workers; certain employees of broadcasters outside the metropolitan area; Taxi driver; employees of U.S. railroads, motor carriers and ships; and hired sales representatives from retail or service companies. Some jobs are classified as exempt by definition. For example, “field service” employees are exempt (“office employees” are not exempt). However, for most workers, it depends on whether they are exempt or not, (a) how much they are paid, (b) how they are paid, and (c) what kind of work they do. Many states have their own pay and obligation tests to determine whether an employee is exempt from overtime under state rules. In many cases, state criteria are more difficult to meet than federal criteria. Some employees may also perform “creative professional” tasks that are exempt. This classification applies to professions such as actors, musicians, composers, writers, cartoonists and some journalists. It is intended to cover employees in this type of employment whose work requires invention, imagination, originality or talent; that provide a unique interpretation or analysis.

Note: There are also exceptions for field workers and IT professionals. There is no minimum wage requirement for the release of sales representatives. For the IT professional exemption, the employee can be paid by salary (as long as it is at least $684 per week) or by the hour (as long as it is at least $27.63 per hour). Non-professional work is work that is primarily intellectual, requires special training, and involves the exercise of discretion and judgment. Professionally exempted workers must have studied beyond high school and generally beyond college in fields other than mechanical arts or crafts (more “academic” than). Advanced degrees are the most common measure in this regard, but they are not necessarily necessary if an employee has attained a similar level of training in other ways (and has performed essentially the same type of work as similar employees with advanced degrees). Non-exempt employees typically receive an hourly wage or earn less than a minimum amount set by the DOL. The RSA identifies two types of employees: non-exempt employees and exempt employees: To obtain exempt employee status, three requirements for exempt employees must be met. The employee must be paid on a salary basis, earn minimum wage for exempt employees, and have duties that are considered exempt.

Here are the criteria for exempt employees. To qualify for California`s administrative, professional and executive exemptions, employees must pass certain pay and assignment tests and earn at least double the state`s minimum hourly wage based on a 40-hour week. The state`s minimum wage is expected to increase on January 1, 2022 and varies depending on the size of the employer. As a result, as of January 1, 2022, employers with 26 or more employees must pay at least $1,200 per week to qualify for the exemption. Employers with fewer than 26 employees must pay a salary of at least $1,120 in 2022 to qualify for the exemption. Employees exempt from the RSA are generally required to receive a salary above a certain level and to work in an administrative, professional, managerial, IT or field service position. The Ministry of Labour (DOL) has an obligation test that allows employers to determine who meets these exemption criteria. Q: Are departments required to pay overtime to “non-exempt” employees who work more than 40 hours per week, or do they have the discretion to grant leave? A: For unrepresented employees exclusively (SDPP): When allocating overtime, managers/supervisors must discuss the method of compensation prior to approving overtime. Management may offer a payment or compensatory holiday (CTO).

The employee chooses the method – payment or CTO. Due to a new DOL overtime rule, employees must earn a minimum of $35,568 per year, equivalent to $684 per week, to be exempt from overtime pay (as of January 2020). Some industries may have hourly employees who are exempt from overtime pay. The most notable examples include agriculture, film, and railways. An employee who meets the salary level criteria as well as the basic salary criteria is only exempted if he or she also performs exempt work duties.