Q: What is the difference between exempt and nonexempt classifications and what are the requirements to classify a job as exempt?
A: The federal Fair Labor Standards Act (FLSA) sets the requirements for defining exempt and nonexempt employees. Understanding the distinction between exempt and nonexempt employees is critical, as this is a highly litigated subject. We recommend that employers create policies and practices (in conjunction with HR professionals or labor counsel) that clearly and accurately define exempt and nonexempt employee classifications within their organizations.
Exemptions are determined based on each specific employment situation. Job titles alone do not determine the exempt or nonexempt status of any employee. Each determination is based on the specific job duties performed and compensation received. Therefore, employers should conduct an exemption assessment for each specific position and group of positions that perform similar duties and receive essentially the same compensation package.
There are five different exempt classifications, each with its own set of criteria. The general rule is to assume the position is nonexempt until you can confirm through the job analysis that the position meets one of the five exemption categories:
- Executive Exemption
- Administrative Exemption
- Professional Exemption (Learned and Creative)
- Computer Professional Exemption
- Outside Sales Exemption
Beyond specific criteria for each of the five exemptions listed above, generally the employees must meet the salary requirements of earning no less than $455 per week on a salary basis (or more in particular states, such as $720 in California).
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