By Tammy Giefer, SPHR
The topic of Exempt vs. Non-Exempt employee status comes up regularly in our line of business. I have had countless conversations with employers on this subject and generally the questions and comments that come from business owners are similar. The top five questions addressed most often include
There is a common misconception that if the employee works in the computer profession, they are automatically exempt. This is false. The computer exemption does not apply to personnel who are performing help desk duties as their primary job function; i.e., installing hardware/software on computers, installing cable or setting up work stations. If your computer personnel are performing the above as their primary job function, then they will likely be considered non-exempt by the Federal Department of Labor (DOL) and subject to the rules of overtime. If they otherwise qualify for Exempt status, they must also be paid a minimum of $455 per week, or no less than $27.63 per hour.
Further information on the computer exemption can be found on the DOL's computer exemption fact sheet: www.dol.gov/whd/regs/compliance/fairpay/fs17e_computer.pdf
Your employee may have a manager or supervisor title, but this alone will not make them exempt. If the manager is performing certain types of tasks - such as clerical work or manual labor as their primary job function or regularly during a significant portion of their workday, then they will be considered non-exempt by the DOL and subject to overtime rules regardless of their title or limited managerial function
This applies to non-exempt personnel. If you are providing your employees with a break time, the FLSA states that an unpaid break period must be a continuous break away from work for a minimum of 30 minutes. I hear this concern expressed time and time again: "My employees take multiple breaks each day; if I counted the number of breaks these employees take, it would add up to far more than 30 minutes". If your employees' break or meal time is not a minimum of 30 consecutive minutes away from their duties or requirements of work, then you must pay them for that break time. State laws vary regarding meal and break time requirements; you should refer to your state laws to determine if you are in compliance.
Office personnel, such as Administrative Assistants, Payroll Technicians, Office Managers, Supply Managers, etc. are often misclassified as exempt employees. These employees are often mistakenly paid on a salary basis, bringing up another misconception that "If I pay my employee salary, they must be exempt". The key in determining this exemption is that the employee must be in a position to "exercise discretion and independent judgment with respect to matters of significance". This statement is a bit generic and leaves much to interpretation. I have found this explanation of "exercise of discretion and independent judgment", quoted from the DOL website, to be most helpful in determining the administrative exemption: In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. The exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources.
The exercise of discretion and independent judgment implies that one has authority to make an independent choice, free from immediate direction or supervision. However, discretion and independent judgment can be exercised even if the decision or recommendation is reviewed at a higher level. Thus, the term "discretion and independent judgment" does not require that the decisions being made have to be final or free from review. The fact that one's decisions may be subject to review and that upon occasion the decisions are revised or reversed after review does not mean that one is not exercising discretion and independent judgment.
Leave without Pay (LWOP)
Too often, LWOP hours are submitted for less than full-day increments for salaried exempt personnel. The common reasons given by employers are:
- Employee did not request their leave in accordance with our policy
- Employee did not have enough paid time off (PTO) hours available
- Employee did not make up their missed hours that week
Per the Fair Labor Standard Act (FLSA), you may not deduct an exempt employee's hours for partial days off. You may require that your employee use PTO to offset any missed time as long as they receive their full salary. If the employee does not have leave hours available, then they must be paid for the full day*.
Your policy may require make-up hours within the same week or pay period. The key to compliance: Exempt, salaried employees are paid a "salary" for the work they do; they are not paid by the hour. If you treat them as an hourly-paid employees by docking their pay for partial days off, the exempt status will be lost and you will be required to pay them for all hours worked, including overtime at 1.5 times pay. If your employee appears to have a pattern of attendance-related unreliability, please consult with your HR professional to discuss how to address this from a performance management perspective.
*This is a Federal law, State laws may be more stringent
Questions about FLSA rules regarding exempt and non-exempt employee status may be directed to your XcelHR Human Resources department.
Further information may be obtained through www.dol.gov
Tammy Giefer, SPHR is a Human Resources Manager at XcelHR, an organization that provides Human Resources solutions to small and mid-sized businesses. She can be reached at 240.238.3750