Exempt/Non-Exempt Employees For The Purposes Of Wage and Hour Laws
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The laws that cover issues of exempt and
non-exempt status of employees are as follows, and the laws that provide for
higher or stricter standards will apply:
The two critical areas that
must be considered when determining Exempt Status are the Duties Test and
the Salary Test:
Duties Test -
the leading factor in determining an exemption
is what job duties the employee actually performs on the job. The Job
Description (or Job Title) is usually of limited value because it often
represents the employer's idealized perception of what job duties a
particular employee is supposed to do, when in reality the job duties the
employee actually performs are much different.
Duties are generally divided into either
exempt or non-exempt duties:
Examples of non-exempt duties:
Examples of exempt duties:
hiring, firing employees
determining credit policies
formulating personnel policies
assessing employee performance
determining staffing levels
making company investment decisions
in the exempt duties group,
the employee needs to use discretion and judgment on a regular basis. For
example, an ordinary bookkeeper may be described by an employer as one who
determines credit policy when in fact, he or she merely deals with
delinquent accounts in accordance with general guidelines by management.
This kind of bookkeeper would not be considered exempt because he or she
does not exercise discretion and judgment on a regular basis.
Further, employers may think that if an employee performs any exempt
duty, however insignificant, they can be classified as exempt. It is important
that in order to be classified as exempt, the employee's primary duty must
be to perform tasks of an exempt nature.
Executive, Administrative, and Professional
The employee's primary duty must consist of the management of the enterprise
or department in which employed.
The employment must customarily and regularly direct the work of two or
more other employees.
The employee must be paid a salary basis of $475.00 per week ($455.00
If an employee does not meet these
requirements then the following criteria must be met:
All the above and a salary of $400.00 per week.
The employee either must have the authority to hire or fire employees
or make recommendation regarding hiring, firing, promotion or other changes
in the status of employees.
The employee must customarily and regularly exercise discretionary powers.
The employee must not devote more than 20% (or 40% in the
case of a retail or service employee) of his hours in the workweek to
activities that are not directly and closely related to the performance of
the work described above.
The employee must be compensated on a salary basis of $475.00 per week.
The employee's primary duty must be the performance of office or non-manual
work directly related to management policies or general business operations,
or the performance of administrative functions in an educational setting
in work directly related to academic instruction or training.
The employee must customarily and regularly
exercise discretion and independent judgment:
an employee under the constant direction of
supervisors is not likely to be exercising the degree of discretion
contemplated by the exemption.
the key question in determining the amount of
discretion exercised by the employee, is whether the employee is making the
decisions independently or whether he is simply following an established
even though an employee has significant
discretion in judgment, if the discretion applies to the production process,
the employee will not qualify under the administrative exemption. The
employee must exercise discretion in respect to the company's policies or
operations to qualify for this exemption.
The employee must:
regularly and directly assist a proprietor, or
employee employed in a bona fide executive or administrative capacity; or,
perform under only general supervision along
specialized or technical lines requiring special training, experience or
execute under only general supervision special
assignments or tasks;
the employee does not devote more than 20%
(40% for retail or service establishment employees) of his hours worked in a
week to activities not directly and closely related to the performance of
the work described above;
provided an employee who is compensated on a salary or fee basis at a
rate of not less than four hundred seventy-five dollars per week,
exclusive of board, lodging, or other facilities, and whose primary duty
consists of the performance of work described above, which includes work
requiring the exercise of discretion and independent judgment, shall be
deemed to meet all of the requirements of this section.
The employee must be compensated on a salary basis of $475 per week except
lawyers, doctors, and teachers.
The employee's primary duty must be:
work requiring knowledge of an advanced type
in a field of science or learning customarily acquired by the prolonged
course of specialized intellectual instruction and study as distinguished
from a general academic education or apprenticeship; or
original and creative work in an artistic
teaching, tutoring, instructing or lecturing
as a teacher certified in the school system or educational establishment by
which he is employed;
The employee's work must require the
consistent exercise of discretion and judgment;
The employee's work must be:
predominantly intellectual and varied in
character as opposed to routine, mental, mechanical or physical work; and
of such character that the output produced or the result accomplished cannot be
standardized in relation to a given period of time.
Although exemptions under Connecticut law no longer tie to FLSA, Part 541
is useful as a guideline in looking at criteria for exemption.
Job titles should not be the sole criteria for claiming exemptions and
certainly not simply paying on a salary.
Each employment situation is looked at on a case by case basis.