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What are exempt employees?

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This is a blog about REAL questions with REAL answers from REAL people for REAL business owners and professionals.  How many times have you had questions about payroll or just business or tax questions in general, but couldn't figure out exactly what to ask or who to ask it to?  I hope it's comforting to know you're not the only one this happens to!  I felt the same way in the beginning, many  years ago.  It's actually what drove me to this profession in 1984!  Now, after decades of helping thousands of people, just like you, I'm writing this blog to help YOU!  So dig in - see if some of our questions and answers put words to your thoughts.  We're here to help - so reach out to us with your every-day challenges and we'll create a post just for you!

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REAL people for

REAL business owners

What is an Exempt Employee? How is this job description decided? -g.g.

The Fair Labor Standards Act (FLSA) is a federal law requiring that most employees receive at least minimum wage for each hour worked and overtime pay for hours worked over 40 in a workweek. Employees who are entitled to both minimum wage and overtime are called non-exempt, while those who are not entitled to both are called exempt.

 

The FLSA lists quite a few exemptions. The most commonly used (particularly in office settings) are the executive, administrative, and professional exemptions. These are known as white collar exemptions, and employees who are properly classified this way are not entitled to minimum wage or overtime. But, to qualify, each position must pass a three-part test:

• Duties: The employee must perform specific tasks (such as managing at least two people) and regularly use their independent judgment and discretion. Each exemption has its own duties test.

• Salary level: The employee must make at least $455 per week (equal to $23,600 per year).

• Salary basis: The employee must be paid the same each week regardless of hours worked or the quantity or quality of their work. Reducing an exempt employee’s pay is only allowed in very narrow circumstances.

 

If an employee meets all the criteria under one of the white collar exemptions, the employee may be properly classified as exempt and will not be entitled to minimum wage or overtime pay. If the employee does not meet all the criteria under a specific exemption, they must be classified as non-exempt, and paid at least minimum wage and overtime when applicable.

 

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Published on:

October 23, 2018

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