It can be difficult to determine whether your business must pay an employee minimum wage and overtime. Generally, an employer must pay minimum wage and overtime to all “non-exempt” employees. What is an exempt employee, then?
It is up to the employer to establish that an employee meets the criteria for exempt status. An employee must meet both state and federal tests to qualify as an exempt employee. The tests look at the employee’s duties and salary to determine whether the employee is exempt.
Some employers assume that because an employee is paid a salary, rather than an hourly wage, the employee is not entitled to minimum wage or overtime pay. That is not always the case and this can be a costly mistake for an employer. An attorney can help you determine whether your employees qualify as exempt.
Below is a general list of exempt employees:
Executives and supervisors – Executives and supervisors may be exempt if they regularly direct at least two employees, have the authority to hire or fire employees, exercise discretionary powers, manage as their primary duty, and make at least $455 a week.
Administrative employees – Administrative employees may be exempt if their primary duty is non-manual work directly related to the operations of the employer, they exercise independent judgment, and they make at least $455 a week.
Professional employees-Employees who practice law or medicine, employees who perform work requiring prolonged study, employees who have talent in a recognized field of artistic endeavor, and employees who teach in a school system or educational institution may qualify as exempt under this exception.
Outside salespersons – Salespeople whose primary duty is to sell goods, services, or intangible items or otherwise work away from the employer’s place of business may be exempt.
Other types of employees may be exempt as well. The best way to determine whether an employee is exempt or nonexempt is to work with an attorney when you hire a new employee. The attorney will help you navigate complex state and federal tests regarding employee status and help you avoid liability for unpaid wages.