Paying someone on a Salary does not make them an Exempt Employee

Employers need to understand the difference between an exempt employee and a nonexempt employee. An exempt employee is not required to be paid overtime, they are not required to be afforded paid rest breaks, and they are not required to be provided a lunch break (from a practical standpoint, employers should provide these items for the exempt employee for efficiency).  A nonexempt employee must receive payment for overtime, they must receive required 10-minute rest breaks if they work 4 hours, and a second 10-minute rest break if they work more than six hours, following their meal break.

One of the primary errors that employers make, is they believe that if they pay an employee on a salary basis, that such salary makes an employee exempt. That is not the case. Only certain classifications of employees can be exempt, particularly from overtime, and the various laws concerning breaks, which must be adhered to. There are classifications of employees, based upon job duties, for them to be potentially exempt. As an example, certain administrative rolls, licensed professionals, creative jobs, software engineers, and others may be exempt. For someone to be exempt, not only do they need to fulfill certain job classifications, but they must be paid twice the minimum wage in order to be exempt. In other words, at the writing of this article, an employee must be paid the equivalent of $32 an hour, for 2080 hours a year, in order to be exempt that means an employee at a minimum must be paid $66,560 a year in order to be an exempt employee, this amount will increase as minimum wages increase. If an employee is not exempt, such employee is entitled to their rest breaks, and paid meal breaks, based upon the hours that they are working.

For an employee to be exempt, is they must be actually fulfilling certain jobs. Just because you call somebody a manager, does not mean that they are exempt, they must meet the rules to qualify. Another example is an employee must have independent decision making and not have to be under a supervision of another individual. An example of this would be a license physician’s assistant, or a paralegal, who cannot exercise independent decision making, and even though they may make more than two times the minimum wage, they are still entitled to receive employee compensation for overtime and receive their breaks. An employer may pay somebody more than the minimum wage portion to be exempt, however that does not make them an exempt employee, and their hourly rate is determined by taking their compensation and dividing it by 2080 hours.

We urge employers to have a professional, either an attorney or a qualified human resource company to determine if someone is an exempt employee or not.