Be sure to check applicable state law as the salary basis requirements may vary. The job duties tests have many detailed components that are specific to each white collar exemption. Many of the exemptions require that the employee have management authority or regularly exercise discretion and independent judgment in performing her job duties.
Some states have different duties requirements than those under the FLSA, so make sure to check the specific requirements for any location where you have employees. Generally speaking, an exempt employee must be paid the same amount for any week in which the employee performs any work, regardless of the number of days or hours worked.
Non-exempt employees must receive at least the minimum wage for all hours worked and are entitled to overtime pay. Generally, employees are considered non-exempt unless an exemption applies. Although non-exempt employees typically receive hourly pay, employers can pay them on a salary basis and pay applicable overtime. Under federal law, when a non-exempt employee works more than 40 hours in a workweek, overtime must be paid at 1.
For example, if an employee worked 60 hours during a workweek, they would receive their regular rate of pay for 40 hours, plus an additional 20 hours at the overtime rate. Some states have more stringent overtime requirements than the FLSA e.
Some states use their own salary and duties tests for classifying whether an employee is exempt and non-exempt from overtime.
California, like many states, has its own minimum wage requirements that employers must meet. California localities also have their own minimum wage and salary requirements.
Check out the full list of California local minimum wage requirements here. Similar to California, New York has its own set of minimum wage requirements on both the state and local level. Check out the local wage requirement updates for Nassau, Suffolk, and Westchester counties, as well as New York City here. For all other states, see our full list of minimum wage requirements. The ramifications of misclassifying employees are significant.
The Department of Labor can impose civil penalties. Finally, in cases of wilful violations, an employer could also face criminal penalties, including fines and imprisonment. It pays to properly classify your workers, as complex as it can be! If you struggle with staying ahead of minimum wage requirements and calculating overtime, Justworks has tools and resources to help you stay compliant. Check out everything included in our Compliance Support here. This also means exempt employees have a less predictable work schedule depending on the demands of the job — while non exempt employees typically know their work hours in advance — even when overtime is involved.
However, non exempt employees tend to have less autonomy when it comes to the jobs they perform. Office Life. Danielle Page. While they may cost a bit more, exempt employees can bring a lot of advantages to your business. Exempt employees are not regulated under the Fair Labor and Standards Act, which sets the federal requirements for overtime pay and minimum wage. Exempt employees must meet the Department of Labor's salary level, salary base and duties criteria.
Exempt employees may be more knowledgeable than nonexempt employees, but they also may cost more to hire. This article is for business owners who need to hire staff and want to know what hiring exempt employees would entail. What is an exempt employee? Exempt vs. How many hours must an exempt employee work per week? What does the FLSA consider an exempt employee? Any employees whom you pay less are not. The salary base test: Exempt status requires that your employee's salary is not subject to decrease , even as a penalty for poor performance.
This test holds even if your employee's job title excludes these words; their tasks supersede their title. Pros of hiring exempt employees You don't have to pay overtime. When you hire exempt employees, you won't pay overtime no matter how many hours these employees work per week. Exempt employees' salaries do not change based on how much time they work. Conversely, you often have to pay nonexempt employees 1. You can assume they're more experienced. Knowledge is increasingly seen as a crucial business asset, and exempt employees usually bring more expertise to the table than their nonexempt counterparts.
If you're looking for highly skilled employees, the exempt route may be your best bet. You can give them more responsibility. Exempt employees are the ones you'll rely on to power your company through crunch time ahead of major events such as business mergers, conferences and seasonal deadlines. Not only are these employees the backbone of your business, but you can feasibly ask them to work longer hours without the expectation of additional pay.
Cons of hiring exempt employees You might have to pay them more. Although you'll never pay exempt employees overtime, they'll likely cost you more than nonexempt employees. That's because exempt employees are likely more experienced and tasked with high-responsibility assignments, which often demands a higher rate of pay.
These salaries may amount to more than you would pay nonexempt employees for their regular and overtime hours combined. You can't deduct pay for hours not worked. Let's say you calculate your exempt employees' salaries based on the assumption of a hour workweek. Even if you find your exempt employee is regularly working fewer than 40 hours per workweek, you cannot deduct from an exempt employee's pay for hours not worked.
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