What makes exempt employee

Not all states have the same guidelines for exempt employees. For example, to classify an individual as exempt from overtime requirements in California, employers must pay the worker at least twice the prevailing minimum wage. All other employees would automatically be eligible for overtime regardless of job responsibilities. Workers earning over the salary threshold would still need to meet the other criteria for exempt status to be placed in that category.

Also, non-exempt employees must be paid overtime wages equivalent to at least 1. In New York, the state's minimum salary threshold for executive and administrative employees has been increased in phases, and the actual rate depends on geographic location and employer size. Check with your state labor department for the latest overtime provisions in your area. The information contained in this article is not legal advice and is not a substitute for such advice.

Department of Labor. State of California Department of Industrial Relations. New York State Labor Department. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Permissible reductions have no effect on the employee's exempt status.

Impermissible reductions may, in that the general rule is that an employee who is subjected to impermissible reductions in salary is no longer paid on a salary basis, and is therefore nonexempt. However, employers have several avenues by which they can "cure" impermissible reductions in salary basis pay, and as a practical matter these make it unlikely that an otherwise exempt employee would become nonexempt because of salary basis pay problems.

The salary basis pay requirement for exempt status does not apply to some jobs for example, doctors, lawyers and schoolteachers are exempt even if the employees are paid hourly. These FLSA exemptions are limited to employees who perform relatively high-level work. Whether the duties of a particular job qualify as exempt depends on what they are.

Job titles or position descriptions are of limited usefulness in this determination. It is the actual job tasks that must be evaluated, along with how the particular job tasks "fit" into the employer's overall operations.

There are three typical categories of exempt job duties, called "executive," "professional," and "administrative. Exempt executive job duties. Job duties are exempt executive job duties if the employee. Supervision means what it implies.

The supervision must be a regular part of the employee's job, and must be of other employees. Supervision of non-employees does not meet the standard. The "two employees" requirement may be met by supervising two full-time employees or the equivalent number of part-time employees.

Two half-time employees equal one full-time employee. In addition, the supervisory employee must have "management" as the "primary duty" of the job. These include in addition to supervision :. Determining whether an employee has management as the primary duty of the position requires case-by-case evaluation. A "rule of thumb" is to determine if the employee is "in charge" of a department or subdivision of the enterprise such as a shift. One handy clue might be to ask who a telephone inquiry would be directed to if the called asked for "the boss.

Thus, for example, if a "sergeant" and a "lieutenant" are each at work at the same time in the same unit or subunit of the organization , only the lieutenant is "in charge" during that time. For example, the night manager at a fast food restaurant may in reality spend most of the shift preparing food and serving customers. The final requirement for the executive exemption is that the employee have genuine input into personnel matters. This does not require that the employee be the final decision maker on such matters, but rather that the employee's input is given "particular weight.

Exempt professional job duties. The job duties of the traditional "learned professions" are exempt. These include lawyers, doctors, dentists, teachers, architects, clergy. Also included are registered nurses but not LPNs , accountants but not bookkeepers , engineers who have engineering degrees or the equivalent and perform work of the sort usually performed by licensed professional engineers , actuaries, scientists but not technicians , pharmacists, and other employees who perform work requiring "advanced knowledge" similar to that historically associated with the traditional learned professions.

Professionally exempt work means work which is predominantly intellectual, requires specialized education, and involves the exercise of discretion and judgment. Professionally exempt workers must have education beyond high school, and usually beyond college, in fields that are distinguished from more "academic" than the mechanical arts or skilled trades.

Advanced degrees are the most common measure of this, but are not absolutely necessary if an employee has attained a similar level of advanced education through other means and perform essentially the same kind of work as similar employees who do have advanced degrees.

Some employees may also perform "creative professional" job duties which are exempt. This classification applies to jobs such as actors, musicians, composers, writers, cartoonists, and some journalists. It is meant to cover employees in these kinds of jobs whose work requires invention, imagination, originality or talent; who contribute a unique interpretation or analysis. Identifying most professionally exempt employees is usually pretty straightforward and uncontroversial, but this is not always the case.

The Department of Labor DOL has a duties test that can help employers determine who meets this exemption criteria. Employers are not required to pay overtime to employees who are properly classified as exempt.

They may, however, choose to compensate such individuals for extra hours worked through benefits packages. If employees are non-exempt, it means they are entitled to minimum wage and overtime pay when they work more than 40 hours per week. The FLSA governs federal minimum wage, overtime, recordkeeping and youth employment for individuals working in both the private and public sectors.

Some state and local jurisdictions, however, have their own wage and hour laws. In these cases, the DOL says that employers must apply the minimum wage or overtime rate that is most favorable to the employee. According to the FLSA, employers must pay non-exempt employees no less than time and one half their regular pay rate for each hour over 40 in a workweek.

Vacation, holidays or sick days should not be included when performing these calculations unless the employee worked on those days. The DOL has established guidelines to determine who is eligible for overtime pay. For instance, employers who have hourly workers must track time and attendance to ensure payroll accuracy. Employers should not automatically assume that employees can properly be considered exempt under the FLSA just because they earn a salary.

Some industries may have hourly employees who are exempt from overtime pay. The more notable examples include the agriculture, movie theater and railroad businesses. Failure to properly distinguish exempt from non-exempt employees, sometimes referred to as misclassification, can adversely affect businesses.

Misclassification may result in:. Sometimes reclassification is necessary, but this too comes with risks.