USA - exempt & non-exempt classification of employees

USA - exempt & non-exempt classification of employees

HR Compliance Considerations for FLSA Determinations

The FLSA and various industry and state regulations establish criteria regarding the overtime eligibility of employees.

Certain employees may be designated as exempt from minimum wage and overtime pay requirements as an administrative, professional, executive, computer or outside sales employee if they satisfy both a duties test and salary basis test. Other exemptions provided by industry, state or federal laws may also apply to certain employees.

A worksite employee’s job title or FLSA preference should not determine the FLSA status designation.

Additionally, the FLSA status for a new position should be determined prior to recruiting for the role so appropriate expectations can be set with candidates regarding scheduling, pay and other applicable considerations.

Failure to accurately designate a worksite employee’s FLSA status can result in wage and hour claims and lead to steep penalties, including but not limited to, punitive damages and fines and retroactive pay for regular and overtime hours worked as well as for missed breaks and paystub violations. It is best practice to regularly review FLSA status designations, annually or more frequently for positions with fluctuating or evolving job duties.

Fact Sheet 17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the FLSA outlines criteria for each of the white-collar exempt categories under which an employee may be designated under the FLSA.

Note: The Department of Labor (DOL) Fact Sheet 17A outlines federal FLSA status criteria for those listed exemptions only. Different exemptions and criteria may apply at the industry, state or federal levels.

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