The Website and Blog of HR Author and Speaker Lori Kleiman

Exempt or Non-exempt? What’s a Person to Do?

Exempt or non exempt? Changes to the overtime law take place soon, so now is a great time to get your team classified properly.The changes to the overtime law going into effect on December 1 of this year – if you haven’t heard or need a refresher, check out our blog from earlier this year. The new evaluation is causing business to re-evaluate whether or not their employees should even be paid on a salaried basis to begin with. Many business people equate salary with “no overtime” and these are two very different issues of law. A salary is merely a decision to pay an employee for a weekly agreed up work week, in order for that number to exclude time worked over 40 hours a week, they must be exempt under the law.

There are 5 very clear classifications of exempt employees. The list includes:

  • Executives/Manager – the leaders in your organization who direct the work of others. We think of the ability to hire and fire, but they must be spending a good amount of time in management. Those that are lead people for example and do the work alongside the team are often not considered exempt.
  • Administrative – Must have independent judgment and decision making. That means that every admin assistant is not exempt. Only those that have decision making authority to move projects forward.
  • Professionals – They must have a job that REQUIRES prolonged study. Think accountants, engineers, lawyers…or be Creative Professionals – whose jobs require innovation, imagination or originality. Your accounts payable person is not exempt even if they have a CPA, the job itself does not require prolonged study.
  • Computer — those that primarily are responsible for the system analyst, programmer or engineer. Those on the help desk or hardware installation teams are typically not exempt.
  • Outside sales – must be engaged in sales OUTSIDE the normal place of work. This is not your telemarketing team or customer service people!

The Department of Labor provides this overview on exempt employees which is excellent. The classifications of exempt work is NOT changing in December, so be sure you understand it clearly. Now is a great time to get your team classified properly. It’s very difficult to explain to employees why they are moving from salaried to hourly, and why you don’t owe them past overtime pay. However, this is a great time to say due to changes in the Fair Labor Standards Act you are moving them now.

Lori Kleiman is an HR expert and HR speaker who conducted over 30 seminars in 2016 to business people and HR professionals sharing best practices and new initiatives. If you’d like to have Lori keynote one of her HR presentations at your upcoming event, click here, or email Lori directly at lori@hrtopics.com!