Determining Employee FLSA Exemption Status

In part one of this two-part blog series, we went over some of the basics on the “Final Rule” and Fair Labor Standards Act, and how these relate to exempt and non-exempt employees. The FLSA plays a big role here, and those recent changes also made some significant alterations to how exemption works within many businesses.

At WTA, Inc., we’re here to provide numerous payroll and tax-related services to our clients, including assistance with all FLSA or employee exemption needs or determinations you may face. Today’s part two of our series will get a bit more specific, looking at some of the tools you can use to determine whether an employee is exempt, plus some examples of special scenarios where exemption comes into play.

determining employee FLSA exemption

Tests to Determine Exemption

There’s a simple way to remember the most basic difference between exempt and non-exempt employees: The former are those who cannot be paid overtime, while the latter can. Exempt employees are paid via salary, not hourly, while non-exempt employees get an hourly wage and can enter into overtime anytime they exceed 40 hours worked in a week.

However, simply relying on a job tile or similar description is not enough to determine exemption. Rather, you must use the “salary and duties” test, which involves confirming that an exempt employee receives at least $684 per week (or $35,568 per year) – if the employee is below this, they are non-exempt. In addition, exempt employees must meet certain job duties standards, including meeting FLSA guidelines for administrative, professional, computer or outside sales exemptions based on duties. If these are not met, even an employee over the requisite weekly compensation level will be considered non-exempt.

Specific Examples

There are a few situations where exemptions become a tricky game. Here are a few examples to be aware of:

  • Vacation: If a non-exempt employee takes a vacation or sick day within a week, these days do not count as work days when calculating overtime.
  • Leaving early: If a non-exempt employee leaves work early for any non-work-related reason, they do not have to be paid for a full day and will not count a full day for overtime. For exempt employees, however, a full day’s pay will be required here.
  • Comp time: Employers who run compensatory time policies, allowing employees who go over their number of regular hours in a work week to take those hours off as comp time later on, may run into to some issues with the FLSA. Non-government employees must be paid in money here, and time off in exchange for cash is not allowed for those in the private sector. However, if a non-exempt employee in a different field normally works below 40 hours in a given week, but exceeds their regular number while not exceeding 40 hours in a given week, they may be eligible for this kind of comp time.

For more on exemption status, the FLSA and other related payroll areas, speak to the staff at WTA, Inc. today.