Salary = Exempt? Think Again.

2017 saw the rise and fall of potential legislation that would change the game as far as who could be classified as exempt. For a long time, companies operated under the assumption that if an employee made a salary, they were exempt from overtime. This legislation opened the door to show that logic was dangerous and outdated and caused many employers to take a fine-tooth comb to their classifications.

Whether an employee is paid with a salary or at an hourly rate is at the discretion of the employer. Just because an employee is paid by salary, does not necessarily mean they are exempt. How an employee is paid is a separate issue from exempt/non-exempt status. Exemption is a bit grayer and has everything to do with whether an employee is eligible for overtime payments.

To determine if an employee should be exempt from overtime payments and therefore “exempt”, they must look at a few variables with the individual employee.

1. Is the employee paid the same amount every week with no deductions for quantity or quality of work?

2. Is that weekly amount at least $455?

3. Do the primary duties of their job match up with the Department of Labor’s job duties test? (Go here: https://www.dol.gov/whd/overtime/fs17a_overview.pdf for more information on that)

If the answer to even 1 of those questions is no, the employee could actually be non-exempt and if that employee works even 1 hour of overtime, they are due compensation for that hour. Failure to pay overtime comes at a higher price than just the overtime payments.

Employers would do well to spend some time investigating whether employees are appropriately classified.

Kellye Smith, PHR®

Resource Consultant

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