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Are Your Employees Exempt or Non-Exempt?
- 1. Are Your Employees Exempt or Non-Exempt?
- 2. Fair Labor Standards Act (FLSA)
- 3. Fair Labor Standards Act (FLSA) Dec. 1st, 2016
- 6. • Executive employees • Administrative employees • Professional employees • Outside sales employees • Computer professional employees “White collar” exemptions: • Minimum wage • Overtime
- 7. 1. Job duties 2. Salary basis 3. Salary level Must pass all three tests to be exempt✔
- 8. 1. Job duties requirements: • Exempt employees often fall into “white collar” job categories • Each job category has an associated duties test • Must meet all of the job duties listed in respective test 1. Job duties 2. Salary basis 3. Salary level
- 9. • Paid a fixed salary or fee • Salary won’t reduce due to quality or quantity of work performed 2. Salary basis requirements: 1. Job duties 2. Salary basis 3. Salary level
- 10. 3. Salary level requirements: Effective Dec. 1st, 2016 $455 Weekly $23,660 Yearly $913 $47,476 1. Job duties 2. Salary basis 3. Salary level
- 11. 1. Job duties 2. Salary basis 3. Salary level Must pass all three tests to be exempt✔
- 12. 1. Job duties 2. Salary basis 3. Salary level 1. Job duties: • “White collar” job categories • Must pass test specific to job category Must pass all three tests to be exempt✔
- 13. 1. Job duties 2. Salary basis 3. Salary level 1. Job duties: • Paid a fixed salary • Salary won’t reduce to due quality or quantity of work 2. Salary basis: • “White collar” job categories • Must pass test specific to job category Must pass all three tests to be exempt✔
- 14. 1. Job duties: • Paid a fixed salary • Salary won’t reduce to due quality or quantity of work 2. Salary basis: 3. Salary level: • Effective December 1st, 2016 • To $913/week or $47,476/year • “White collar” job categories • Must pass test specific to job category 1. Job duties 2. Salary basis 3. Salary level Must pass all three tests to be exempt✔
- 15. Overtime
- 16. Overtime
- 17. Looking for more help? Visit dol.gov/overtime
Editor's Notes
- Today we’re going to talk about a new federal overtime ruling under the Fair Labor Standards act, or FLSA.
- The FLSA is a federal law that regulates minimum wage and overtime pay, among other things. Most employees covered by the FLSA must be paid at least the minimum wage, and be paid at least time and a half their regular rate of pay for any overtime hours they work. But, the FLSA does exempt certain kinds of employees from the minimum wage and overtime requirements.
- And as of December 1st, the salary threshold for exempt employees will change from $455 a week to $913 a week, which is from $23,660 a year, to $47,476 a year.
- This is a big change that will impact up to four million people.
- So, what does this mean for you and your team? Let’s start out with some basic definitions first.
- In general, exempt employees are exempt from minimum wage and overtime requirements. The most common exemptions are called “white collar” exemptions. Some of those white collar exemptions include executives, administrative employees, professional employees, outside sales, and computer professionals. However, an employee can’t just have a white collar profession to count as exempt from overtime pay.
- An employee absolutely must meet the standards of all three different tests to qualify as exempt. Those tests include: *Job duties *Salary Basis *and Salary Level
- Let’s start with the job duties test. As shown before, exempt employees often fall into “white collar” job categories, such as executive or administrative employees. For each exemption category, there is an associated duties test set forth in the FLSA regulations. An exempt employee must meet all of the job duties listed in her respective job duties test.
- Next, there’s the salary basis test. In general, an exempt employee should be paid a fixed salary, or fee for certain exemptions. That means her salary won’t reduce due to the quality or quantity of work she performs.
- Lastly, there’s the salary level test. Prior to December 1st 2016, the FLSA minimum salary level for an exempt employee was at $455 a week, or $23,660 a year. However, effective December 1st, the new salary threshold is at $913 a week, or $47,476 a year.
- So, let’s review once more with all the new information. In general, an employee must meet all three tests to be exempt from minimum wage and overtime requirements.
- The first test is a job duties test. An exempt employee must pass a job duties test that is specific to her job category.
- The second test includes salary basis requirements.
- And lastly, the third test includes salary level requirements, which are changing on December 1st, 2016.
- In general, exempt employees are exempt from being paid overtime. But if an employee does not meet all three of the tests…
- …She may be classified as non-exempt and eligible for overtime pay.
- We know that classifying an employee can be confusing. There are also different state laws that vary the requirements on classification and overtime pay. If you’re looking for more help, you can learn more at dol.gov/overtime.