Thursday, March 24, 2011

What Is an Exempt Employee Vs. a Nonexempt Employee?

By Debbie A. Duran, eHow Contributor updated: March 23, 2011
http://www.ehow.com/info_8099215_exempt-employee-vs-nonexempt-employee.html


The United States Department of Labor's Wage and Hour Division administers the Fair Labor Standards Act (FLSA), which is the law that regulates and enforces the federal minimum wage, overtime pay and child labor .FLSA has brought in over $140.2 million in minimum wage and overtime payments on behalf of more than 197,000 employees. The division has also enforced over 28,000 compliance, which has resulted in more than $9.9 million in civil penalties against employers.

Proper Classification

Job titles do not determined exempt or nonexempt classification. Nonexempt employees earn less than $455 per week ($23,660 per year) and usually are paid hourly. Nonexempt employees can make more than $455 per week, but their duties and ability to earn overtime determines their status. Exempt employees are categorized as: executive, administrative, and professional with no overtime eligibility. They receive a preset salary each pay period.Their pay cannot be reduced for absences, lateness or quality of work.

Issues Not Covered by FLSA

The FLSA does not define part-time or full-time labor. This is often determined by the employer. The U.S. Bureau of Labor Statistic states that on average, non-exempt employees work approximately 42 hours per week and exempt employees work approximately 44 hours.Whenever nonexempt reach 40 hours per week, then overtime kicks in at 1 1/2 times their regular rate. The FLSA does not cover the following: vacations, sick leave, holidays, severance pay, health benefits, pay increase, breaks or lunch periods.

Ramifications

Whether or not an employer has misclassified a nonexempt employee as exempt (or vice versa) is determined on a case-by-case basis. If an employer has misclassified an employee either intentionally or by sheer ignorance of the law, the employee has the right to get an attorney to pursue legal actions or the employee can file a complaint with the Department of Labor, Wage and Hour Division (WHD). Employers are fined $1,000 per each violation.

Considerations

There is not always an absolutely definitive way to classify some employees, therefore, discretion is required when making a determination. Executive employees manage an enterprise and supervise two or more employees; administrative employees perform office or nonmanual work; professional employees perform work that requires advance knowledge (doctor, lawyer, etc).



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