Nov 1, 2009
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By:
Scott A. Williams, SPHR, CIRM
April 15, 2009
Companies must continually maneuver around many pitfalls in the employment landscape. With the new administration, the landscape has, once again, changed. The Stonehaven Group has encountered many "interesting" situations recently. Let us begin with the basics.
Exempt and Nonexempt Status: Different Compensation Structures
Exempt positions are excluded from minimum wage, overtime regulations, and other rights and protections afforded nonexempt workers. Employers must pay a salary rather than an hourly wage for a position for it to be exempt. Typically, only executive, supervisory, professional or outside sales positions are exempt positions.
Nonexempt employees, as the term implies, are not exempt from Fair Labor Standards Act (FLSA) requirements. Employees who fall within this category must be paid at least the general minimum wage for each hour worked and given overtime pay of not less than one and a half times their hourly rate for any hours worked beyond 40 each week. The FLSA and the laws of the 50 states regulate what constitutes "overtime."
Many employers incorrectly believe that all salaried employees are exempt or that by paying an employee a salary, they automatically become exempt. However, just as the labels "employee" and "independent contractor" do not determine a worker's actual status in the eyes of the IRS, the same is true for exempt and nonexempt status employees in the eyes of the federal and state labor departments. Exempt and nonexempt status has nothing to do with job titles and whether an employee is salaried or receives an hourly wage. The legal definition of "exempt" and "nonexempt" has much more to do with an employee's level of responsibility or his or her status as a professional.
