You are getting terrific responses.
To those responses I would like to include the following
Exempt vs. Non-Exempt Category is More Intricate Than You May Believe
If you pay an employee a wage, rather than paying them per hour, that suggests you do not have to track their hours or pay overtime if they work over 40 hours per week (or 8 per day in California)?
Per the Fair Labor Standards Act (FLSA), there are extremely specific rules that determine when an employee can be considered “exempt” from overtime. Unfortunately, the way you pay the staff member (income vs. per hour) is inadequate: the worker needs to pass 3 “tests” to be legally categorized as exempt. The staff member does not really take a test, rather the company uses the “test” (a set of filters provided by the DOL) to figure out if an employee, based upon a variety of elements, might qualify as an exempt staff member.
And given that exempt vs. non-exempt worker categories (or more aptly, MIS classifications) are at the center of many Internal Revenue Service and Department of Labor audits, they require to be the focus of your attention.
This subject is so big and so confusing that in addition to covering the fundamental rules in this month’s trainer, we will offer you a link to a self-audit page including more directions and guidance.
Ready? Here are the essentials.
What is the Fair Labor Standards Act?
The Fair Labor Standards Act (FLSA) is a federal labor law that governs overtime, base pay, kid labor protections, and the Equal Pay Act. Under the FLSA, employees are either thought about “non-exempt” or “exempt.” Non-exempt staff members are entitled to overtime pay. Exempt staff members are not.
The FLSA broadly defines several categories of “white collar” tasks, such as medical professionals, executives, and top-level managers, as exempt from overtime requirements. However, whether a particular position at your practice is exempt or not can be a complex analysis.
Exempt vs. Non-Exempt Employees
Remember, regardless of whether the staff member is paid on a wage or per hour basis, they can still be either
- Exempt (NOT subject to overtime requirements, minimum wage, or break/rest durations); or
- Non-Exempt (ARE subject to overtime pay requirements, minimum wage, and breaks/rest periods).
So, if paying them a salary does not automatically make them exempt, how can you determine if an employee is exempt or non-exempt?
Answer: It depends upon (a) just how much they are paid, (b) how they are paid, and (c) what kind of work they do.
With couple of exceptions, in order to be classified appropriately as exempt from federal overtime rules, the employee should pass all 3 of these tests:
- Income Level: The position must earn a minimum of $455/ week ($23,600/ year). While the DOL had prepared to raise the income level to $913/ week ($47,476/ year) by December 1, 2016, in November 2016 a Texas federal judge released an injunction presently barring enforcement of the new guidelines. California: Exempt staff members need to be paid at least two times the appropriate state minimum wage. The base pay rate is various for little and large employers and modifications annual. Licensed doctors in California need to get a minimum of $7715 per hour. Call CEDR for particular guidance, at 866-414-6056
- Wage Basis: Worker must be paid a fixed quantity each pay duration (a repaired salary), without decrease for the amount or quality of work carried out. (Reductions may be made in extremely restricted situations.) Keep in mind that this test does not apply to physicians, who might be paid on a commission or charge basis and still be exempt.
- Job Duties: Employees must fulfill the duty requirements for one of three classifications of exemption: Administrative, Executive, or Expert. This is the challenging part! See our Exempt vs. Non Exempt Self-Audit List.
Conclusion: Staff members should meet the standards of ALL THREE “tests” to be considered exempt.
Typical Positions That Are Thought About Exempt
By example: In a common medical or dental practice, the only workers that might qualify as exempt are your associate medical professionals and workplace supervisors (if your OMs manage a minimum of TWO (2) staff members, not including themselves, for more than 50%of their time). If you’re a dental professional, please note that the Department of Labor has actually consistently recommended that the majority of hygienists DO NOT satisfy the requisite levels to be thought about exempt.
If you do a self-audit, there’s no need to reveal that you are examining job descriptions for exemption status; simply do it as a typical part of your HR evaluation process. We suggest you use the Position Audit Checklist on the last page HERE for each staff member you presently have actually categorized as exempt. Keep a copy in the worker’s personnel file. Remember that employee category guidelines might differ from state to state.
Although the specifics can be difficult, if you have actually made the effort to self-audit and document your efforts, the outcome of any outside audit you may deal with will likely be FAR less burdensome, even if you got your self-audit wrong. Your paperwork will function as proof of your attempts to adhere to the law.