Do I need to classify my exempt employees with the appropriate federal exemption code?

Yes. The Fair Labor Standards Act (FLSA) includes codes regarding overtime and minimum wage. It is important that employees whose jobs fall under the FLSA be properly classified as exempt or non-exempt because it determines whether or not they are eligible for overtime. Exempt or Non-Exempt The majority of workers governed by the Fair Labor […]

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2018 HSA contribution limit

Yes. The Fair Labor Standards Act (FLSA) includes codes regarding overtime and minimum wage. It is important that employees whose jobs fall under the FLSA be properly classified as exempt or non-exempt because it determines whether or not they are eligible for overtime.

Exempt or Non-Exempt

The majority of workers governed by the Fair Labor Standards Act are non-exempt. Very few jobs are considered exempt by definition, such as Outside Sales.”

For other jobs, employees are exempt only if they meet certain requirements:

  • The employee must be paid at least $455 per week on a salary or fee basis; and
  • The employee must perform exempt job duties.

Exempt Duties

An employee’s job title alone does not determine their exemption status; their specific duties and responsibilities do. Typically, exempt job duties fall into the categories of Executive, Professional, or Administrative.

That said, not all of the jobs that fall into these categories are exempt. This is where determining exemptions comes down to a case-by-case basis. An administrative employee, for example, may be exempt if their duties:

  • Include office or non-manual work
  • Are directly related to the management or general business operations of the company or its customers
  • Commonly require independent judgment on and discretion about matters of significance

An administrative clerical assistant, then, may not be exempt, whereas an administrative inventory buyer for a department store likely will be.

FLSA Final Rule

On November 22, 2016, a federal court put a hold on the Department of Labor’s increase to the minimum salary requirement for the Executive, Administrative, and Professional exemption under the Fair Labor Standards Act, which was scheduled to take effect on December 1, 2016. This is currently pending legal action.

Final Note

Mislabeling a non-exempt worker as exempt poses a big legal risk to an employer. Prevent this by double-checking your employees’ job duties and making sure they are correctly classified.

Helpful Links

FLSA Overtime Security Advisor – DOL.gov

Exemption for Executive, Professional, and Administrative Employees – DOL.gov

DOL’s Final Rule – DOL.gov

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