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Employees in organizations are classified as either exempt or non-exempt. There are different types of employee benefits and eligibility requirements for each category. It is vital to know which categories your employees fit into, in order to ensure fair compensation and allocation of duties.
Exempt employees are not eligible for minimum wage or overtime pay. These employees receive a salary for the work they perform. The Fair Labor Standards Act (FSLA) provides basic guidelines to distinguish the difference between the two types of employee classification. The federal government and individual states have laws that address this employee classification and employee rights. Therefore, it is essential that employers are aware of labor laws.
Here are three requirements workers must meet to be considered exempt:
1. Job Duties
Exempt employees must perform specific job duties. The employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations. This is in addition to meeting earning and salary requirements. Furthermore, exemption status only applies to those who have high-level responsibilities.
2. Exempt Employees receive salaries
The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed. These employees will remain exempt as long as their monthly base payment is higher than the FLSA minimum threshold.
The FSLA minimum salary threshold changes every year. Therefore, employers should keep current on regulations concerning employee compensation. In 2020, exempt employees must earn a minimum of $684 per week or $35,568 annually.
Non-exempt employees are eligible for both hourly wages and overtime pay. After an employee works over 40 hours a week, employers must pay overtime. Any position that earns minimum wage is eligible for overtime and therefore cannot be exempt. Typically, paralegals fall into this category. Check the Department of Labor’s website for specifics regarding paralegal classifications.
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