Sweet Sensation

Whether it’s better to be exempt or non-exempt depends on individual circumstances and preferences. Some employees may prefer the stability of a set salary and benefits, while others may prefer the opportunity to earn more money through overtime pay. Ultimately, it’s important https://adprun.net/ for employees to understand their job duties and compensation structure to make an informed decision. Additionally, an exempt employee’s pay rate must always meet or exceed both the federal and state minimum wage rates, regardless of the number of hours worked.

  1. While they may be able to take longer lunches or leave for an appointment in the middle of the day, they are also more likely to be required to come in early or stay late, often resulting in over 40 working hours per week.
  2. While an hourly employee, she receives a commission for every client that ends up purchasing her company’s services.
  3. A nonexempt employee is “not exempt” from FLSA provisions, so they are eligible for minimum wage and overtime pay.

One of the biggest misconceptions with employee classification is that anyone who isn’t bussing tables or taking orders at the corner deli can qualify for one of the white collar exemptions under the Department of Labor (DOL). To be exempt, an employee must earn a salary basis no less than $684 per week, or $35,568 annually. Employers can use non-discretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices. Some employers might create an employee benefits package with extra perks in lieu of overtime pay. If you are consistently asked to work overtime, you may be able to negotiate a raise. In addition to the Fair Labor Standards Act, many states have their own set of wage requirements and laws, and employers must abide by both federal and state laws to stay compliant.

Determining an employee’s eligibility for overtime is rarely a straightforward process. The cost of getting classification wrong could be significant, so strongly consider bringing in an employment attorney who specializes in the FLSA. Legal counsel can help you cut through the uncertainty and safely navigate your state and city’s overtime rules, too.

Doing the extra work upfront may help you remain compliant and avoid time-consuming and costly penalties. Of course, many non-exempt workers may perform some of these duties, but through the FLSA, exempt status must meet these criteria and others related to compensation. Department of Labor (DOL) announced a proposed overtime rule that would raise the weekly salary limit under the Federal Labor Standards Act (FLSA) from $684 to $1,059, which equals a little more than $55,000 per year.

Previously, the minimum salary had been $23,660, or $455 per week, since 2004. Compare payroll packages today to determine which solution is best for your growing business & its employees. Of course, there are also office workers who are non-exempt, but there are few, if any, labor-intensive positions that carry exempt status. As many companies have learned the hard way, improperly classifying employees as exempt can lead to serious fines from the Department of Labor. Paycor’s Support Center gives our customers access to a knowledge base of HR tips, alerts, checklists, and templates to help reduce the risk of non-compliance. In addition, our customer portal provides online case management and live chat functionality with Paycor advocates (not a chatbot).

Professional Employees

Her primary responsibility is surveying commercial properties and determining whether they’re structurally stable and sanitary. Attract and retain your people with recruiting, performance management, goals, and recognition. It’s up to employers to create a culture that promotes better mental health for everyone.

Additionally, you may want to closely review some of the 2023 proposed DOL changes, including the worker classification and overtime rule. Employees covered by the FLSA must also receive overtime pay at time-and-one-half their regular rate when working more than 40 hours a week. However, it’s important to note that many states have their own wage and hour laws that employers must follow.

The FLSA provides minimum standards that may be exceeded, but cannot be waived or reduced. Employers must comply, for example, with any Federal, State or municipal laws, regulations or ordinances establishing a higher minimum wage or lower maximum workweek than those established under the FLSA. Similarly, employers may, on their own initiative or under a collective bargaining agreement, provide a higher wage, shorter workweek, or higher overtime premium exempt vs non-exempt than provided under the FLSA. While collective bargaining agreements cannot waive or reduce FLSA protections, nothing in the FLSA or the Part 541 regulation relieves employers from their contractual obligations under such bargaining agreements. They should receive preferential treatment in terms of their working conditions, and many states recognize this treatment in the form of regular breaks and lunch periods as well as premium pay for overtime.

Waiting Time Penalties

This final rule rescinds the Independent Contractor Status Under the Fair Labor Standards Act rule (2021 IC Rule, 86 FR 1168), that was published on January 7, 2021. The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.


For most exemptions, more than 50 percent of an employee’s time must be spent performing exempt job duties. This fact sheet provides general information on the exemption from minimum wage and overtime pay provided by Section 13(a)(1) of the FLSA as defined by Regulations, 29 C.F.R. Part 541. To combat potential challenges, managers should review the company’s policies and practices. Document in the employee handbook that management expects nonexempt workers to strictly adhere to their break and lunch schedules, have any overtime approved in advance and avoid taking work home.

The Fair Labor Standards Act (FLSA) mandates that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay for working more than 40 hours per week. The law also includes exemptions for specific types of workers in unique industries. In addition to failing to pay appropriate overtime to nonexempt workers, employers also mistakenly misclassify employees as exempt who, in reality, should be nonexempt. Employees may be exempt from the FLSA’s overtime provisions if they are employed in professional, executive or administrative capacities, or if they are outside salespersons. A full discussion of the intricacies of exemption rules goes well beyond the scope of this article. What is critical to remember, though, is that employees who are eligible for exemption status under federal law will still need to meet the tests of state exemption criteria.

What’s more, many employers believe that random wage and hour audits by the DOL create the only exposure to potential penalties. However, more audits come as a result of a disgruntled employee, something the manager is responsible for. You may think you’re doing someone a favor, but in reality, you’re setting yourself up for wage and overtime claims using that newly increased wage. Again, the DOL recommends a review of each job duty annually, because what an employee was doing last year may have evolved into something new without a title or salary change. For example, your receptionist has started answering the phone every day during lunch.

Under federal law, to be classified under one of the white collar exemptions, an employee must make at least $684 per week (which translates to $35,568 per year). That’s exclusive of board, lodging or other facilities in accordance with federal regulations. The employee’s duties determine whether the employee is exempt or non-exempt, not whether they are paid by salary. It applies to programmers and engineers specifically, and is one of the rare instances where specific job titles are listed in the legislation. Be sure to note that a qualifying employee’s duties don’t have to exclusively impact their own company’s operations.

Exempt and Nonexempt Employees

The DOL estimates these new rules will make 1.3 million American workers newly eligible for overtime pay and other FLSA protections. Paycor’s Time and Attendance software offers employers multiple forms of time-entry (mobile, web, kiosk, clock) so employees can clock in and out from anywhere, anytime. And with mobile punching, employers can verify locations and set precise coordinates to ensure employees are punching in and out from the desired work location. With one location to track and monitor hours worked, employers have instant access to the data they need to accurately report Component 2 data on the EEO-1 survey. If you’re struggling to understand general overtime pay requirements and don’t know which areas to stay updated on, don’t worry—we’ve got you covered. The easiest place to start is to make sure you’re properly classifying your employees.

Executive assistants and coordinator-level employees potentially fall under this category and could be classified as either exempt or nonexempt. How much discretion and independent judgment they exercise is often open to interpretation. Although punitive damages are not involved, civil penalties could be assessed for repeated or willful overtime violations to the tune of $1,000 per transgression plus liquidated damages for unpaid wages. Remember, as an employer, you are required to track and pay overtime (as defined by federal and state requirements) if an individual does not meet an exemption.

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