What Factors Determine Whether I Can Classify an Employee as Exempt or Non-Exempt?

Salary

The Fair Labor Standards Act first requires that employers look at average weekly salary to determine exempt or non-exempt status. With the exception of computer-related jobs, an employee must earn at least $455 per week to pass the salary test in the first step of exempt classification. When the image of a salaried worker comes to mind, $455 doesn't seem that high of a wage. It averages out to approximately $11.38 an hour, which is pretty low when you think about an exempt employee's duties and responsibilities. Computer-related jobs that pay more than $27.63 an hour are considered exempt under the FLSA. Employees whose compensation is $100,000 a year or more are automatically considered exempt under this law.

Non-manual work is most often considered exempt under the FLSA regulations. In most circumstances, workers who perform manual labor, such as production workers and employees in the trades related to construction and skilled labor, are considered non-exempt employees. Their jobs often require physical strength, manual dexterity and hand-eye coordination for performing the essential functions of their jobs. Non-manual work consists of duties that usually do not require certain levels of physical dexterity and coordination to perform work assignments.

Exempt classification isn't based on job title. Nevertheless, an employee's position is significant in the determination between exempt and non-exempt employment. The FLSA considers administrative, executive and professional job positions exempt, provided the actual job duties meet certain criteria. For example, under the executive exemption, the employee must be in a role where he is responsible for directing the work of at least two full-time employees. Managers typically are considered exempt employees because their job duties include supervision of employees who report to them. In addition, employees with at least 20 percent ownership of the business are considered exempt because they have influence and control of the business operations.

The use of independent judgment is an important component of the distinction between exempt and non-exempt status. Exempt employees are expected to exercise independent judgment in the performance of their job duties. In fact, the use of discretion, independent judgment and similar professional competencies must comprise the majority of an exempt employee's job function. Employees whose job duties require them to have specialized knowledge, expertise or training also may be considered exempt.