Exempt vs. Non-Exempt Employees – Rights and Responsibilities Under the Fair Labor Standards Act
A lot of people get confused over the meanings of exempt and non-exempt employment status. But it’s an issue of vital importance for both employers and workers to understand. To fully grasp the meaning of the terms, let’s take a step back in time.
The terms exempt and non-exempt refer to the Fair Labor Standards Act of 1938 – also known as the Wages and Hours bill. The law was passed by Congress and signed by President Franklin Roosevelt in response to the plight of workers during the Great Depression. Among its major provisions was a nationwide minimum hourly wage, and tried to boost employment by mandating that workers receive overtime pay for any hours above forty worked in a week.
The law is still in effect today, though the minimum wage portion of the law is periodically adjusted to keep up with the increasing cost of living.
Congress understood that laws that applied to laborers and farmhands who worked under the supervision of a foreman or plant manager did not necessarily translate well to professionals and managers who have to work independently. So the law includes provisions to exempt these kinds of workers. That is, managerial workers and certain kinds of professional employees, such as lawyers, doctors and accountants, are exempt from the FLSA requirements. The hourly work force, on the other hand, is non-exempt from the provisions of the FLSA. And that, in a nutshell, is the distinction.
Exempt employees, therefore, don’t receive an hourly wage based on the time worked, and do not receive overtime pay. Instead, these employees have greater freedom to set their own schedules, as long as the required work for the week is done. Exempt employees are typically paid a salary to compensate them for their time and efforts during the entire week, though some are paid by commission.
Who is Covered By the Law
The law affects employees federal, state or local government agencies, hospitals, schools and companies with annual revenues of $500,000 or more. Employees outside of those industries may also be covered in jobs related to interstate or foreign commerce. Under the current law, any workers earning less than $23,600 ($455 per week) are considered non-exempt.
Time Off For Exempt Employees
This is where a lot of employers get confused: When a salary employee takes time off, the employer can’t dock his or her salary for the time off. If an exempt employee shows up to work for a single day of the week, that employee is entitled to his or her entire salary for that week. The employer cannot reduce the salary portion of the workers’ pay because of time off.
Instead, the typical solution is to allow the exempt employee to build up vacation days, sick days or paid time off days. Rather than reduce pay, the employer will subtract days or half-days from the worker’s personal leave allocation.
How it Affects Workers
Unless you are considered an exempt employee, and if you work in a covered industry or business, you must receive 150 percent of your base pay for any hours worked over 40 in a week.
In some cases, employers have attempted to avoid paying overtime by mislabeling the job title or job description. This could be a serious violation of federal employment law.
If you believe your employer is not acting in accordance with the law, it’s important to speak with an attorney right away. Don’t wait until any possible claims for back overtime pay becomes so large you will have a hard time collecting on them.
When you contact us for a free consultation, you will work directly with a lawyer with a proven record of success in cases like yours. You will know that your rights and interests are being protected by a true professional. You will know that your lawyer truly cares about what happens to you and your family.
We invite you to call our Birmingham offices today at (205) 881-0555 for honest answers to important labor and employment law, or to schedule an appointment.
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