How to Apply the Exempt Employee Definition
An exempt employee does not qualify for overtime under federal, or if applicable, state law. The Fair Labor Standards Act, which the United States Department of Labor, Wage and Hour Division administrates, governs federal exempt requirements. The state labor department oversees state exempt laws. Specific rules apply to exempt employees. As an employer, you are supposed to carefully examine the terms of exempt before labeling an employee as such.
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Instructions
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Locate FLSA requirements for labeling an exempt employee. The criteria for exempt primarily depend on the employee's job duties. In most cases, white-collar employees and those who perform non-manual labor are exempt. Visit the U.S. Department of Labor's website for exempt requirements by job duties or contact the department directly.
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Determine whether the employee is salaried or hourly. In most cases, salaried employees are exempt, but on occasion, an employee can be exempt and hourly.
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Ensure that salaried employees meet the salary level test. At the time of publication, salaried employees must receive no less than $455 per week, as of June 2011.
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Ensure that hourly employees meet the hourly-basis requirement. For example, hourly computer employees must receive no less than $27.63 per hour, as of June 2011.
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Match salaried employees' job duties with FLSA requirements. For example, an executive employee must perform the following duties to qualify for exempt: manage the company or a recognize division within it, frequently direct the work of at least two fulltime workers, and have the power to hire and terminate other employees or his recommendations and suggestions on such matters must be given significant weight.
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Match hourly employees' job duties with FLSA requirements. For example, to qualify for exempt, a computer employee must work as a software engineer, computer programmer, systems analyst or provide similar services in the computer field, plus perform additional duties as defined by the FLSA.
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Tips & Warnings
The income level test does not apply to certain exempt employees, such as an outside salesperson or academic schoolteacher. In this case, use the employee's job duties to determine exempt status.
Some employees can be paid on a fee basis instead of on a salary or hourly basis.
Some states fully adopt the FLSA; some have exempt laws that differ from federal law. For example, California requires employers to pay exempt employees no less than twice the state minimum wage of $8 per hour, at the time of publication. When federal and state laws apply, use the law that gives the employee the most benefits.
Salaried employees who do not meet the exempt job requirements for their occupation are nonexempt and qualify for overtime.
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