Employee classification is highly litigated and the distinction between exempt and nonexempt is critical. With the federal law increasing the salary threshold for exempt employees to $47,476 beginning December 1, 2016, employers must either give current salaried employees a raise or reclassify their position.
What is the difference between nonexempt and exempt employees? The main differences are how they are paid and job duties.
- Employees paid for all hours worked
- Paid at overtime rates for all work over 8 hours in a day and 40 hours in a week
- Must be permitted to take meal and rest break
- Records all time worked
- Paid to get job done regardless of hours worked
- Paid a set salary
- No overtime, even if employee works more than 40 hours a week
- Not required to take meal or rest breaks
It is important to note that simply having the title of “manager” does not qualify an employee for being exempt. An exempt employee should have more than 50% managerial duties such as directing and planning work, interviewing, selecting, hiring, and training employees, setting and adjusting work hours, discipline employees, and distributing work to others. Additionally, the exempt employee should regularly exercise discretion and independent judgment.
On the other hand, nonexempt duties are when employees perform the same kind of work as subordinates, administrative or clerical tasks, production work, and replenishing stock. For instance, if a Sales Manager in a retail store were performing the same duties as the other sales associates, he or she would not qualify for the exemption. If the Sales Manager focused most of their working time on managerial duties listed above, then the Sales Manager would qualify under exempt.