Factors to consider when determining whether an employer has an actual practice of making improper deductions include, but are not limited to: the number of improper deductions, particularly as compared to the number of employee infractions warranting deductions; the time period during which the employer made improper deductions; the number and geographic location of both the employees whose salary was improperly reduced and the managers responsible; and whether the employer has a clearly communicated policy permitting or prohibiting improper deductions.
Isolated or inadvertent improper deductions will not result in loss of the exemption if the employer reimburses the employee for the improper deductions. If an employer 1 has a clearly communicated policy prohibiting improper deductions and including a complaint mechanism, 2 reimburses employees for any improper deductions, and 3 makes a good faith commitment to comply in the future, the employer will not lose the exemption for any employees unless the employer willfully violates the policy by continuing the improper deductions after receiving employee complaints.
When state law differs from the federal FLSA, an employer must comply with the standard most protective to employees. Links to your state labor department can be found at www. This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations.
Some industries may have hourly employees who are exempt from overtime pay. The more notable examples include the agriculture, movie theater and railroad businesses. Failure to properly distinguish exempt from non-exempt employees, sometimes referred to as misclassification, can adversely affect businesses.
Misclassification may result in:. Sometimes reclassification is necessary, but this too comes with risks. For example, a non-exempt employee who is reclassified as exempt may resent no longer receiving overtime wages, while an exempt employee who is reclassified as non-exempt may perceive the change as a reduction in prestige.
This type of open communication can help prevent reduced morale. Employers are free to create work schedules for exempt employees however they see fit as long as they comply with any state and local regulations that govern meals and breaks.
Exempt employees are required to meet certain DOL job criteria known as the duties test. For example, someone who qualifies for the executive exemption must participate in the hiring and management of other employees. Job titles alone are not enough to grant exempt status. No, however, many businesses have company policies mandating a hour workweek for exempt employees.
Doing so might result in the employee no longer qualifying for the exemption. These include lawyers, doctors, dentists, teachers, architects, clergy. Also included are registered nurses but not LPNs , accountants but not bookkeepers , engineers who have engineering degrees or the equivalent and perform work of the sort usually performed by licensed professional engineers , actuaries, scientists but not technicians , pharmacists, and other employees who perform work requiring "advanced knowledge" similar to that historically associated with the traditional learned professions.
Professionally exempt work means work which is predominantly intellectual, requires specialized education, and involves the exercise of discretion and judgment. Professionally exempt workers must have education beyond high school, and usually beyond college, in fields that are distinguished from more "academic" than the mechanical arts or skilled trades.
Advanced degrees are the most common measure of this, but are not absolutely necessary if an employee has attained a similar level of advanced education through other means and perform essentially the same kind of work as similar employees who do have advanced degrees.
Some employees may also perform "creative professional" job duties which are exempt. This classification applies to jobs such as actors, musicians, composers, writers, cartoonists, and some journalists. It is meant to cover employees in these kinds of jobs whose work requires invention, imagination, originality or talent; who contribute a unique interpretation or analysis.
Identifying most professionally exempt employees is usually pretty straightforward and uncontroversial, but this is not always the case. Whether a journalist is professionally exempt, for example, or a commercial artist, will likely require careful analysis of just what the employee actually does. Exempt Administrative job duties. The most elusive and imprecise of the definitions of exempt job duties is for exempt "administrative" job duties.
The Regulatory definition provides that exempt administrative job duties are. The administrative exemption is designed for relatively high-level employees whose main job is to "keep the business running. Employees who make what the business sells are not administrative employees. Administrative employees provide "support" to the operational or production employees.
They are "staff" rather than "line" employees. Examples of administrative functions include labor relations and personnel human resources employees , payroll and finance including budgeting and benefits management , records maintenance, accounting and tax, marketing and advertising as differentiated from direct sales , quality control, public relations including shareholder or investment relations, and government relations , legal and regulatory compliance, and some computer-related jobs such as network, internet and database administration.
See Computer employees. To be exempt under the administrative exemption, the "staff" or "support" work must be office or nonmanual, and must be for matters of significance.
Clerical employees perform office or nonmanual support work but are not administratively exempt. Nor is administrative work exempt just because it is financially important, in the sense that the employer would experience financial losses if the employee fails to perform competently. Administratively exempt work typically involves the exercise of discretion and judgment, with the authority to make independent decisions on matters which affect the business as a whole or a significant part of it.
Questions to ask might include whether the employee has the authority to formulate or interpret company policies; how major the employee's assignments are in relation to the overall business operations of the enterprise buying paper clips versus buying a fleet of delivery vehicles, for example ; whether the employee has the authority to commit the employer in matters which have significant financial impact; whether the employee has the authority to deviate from company policy without prior approval.
An example of administratively exempt work could be the buyer for a department store. The job involves work which is necessary to the overall operation of the store -- selecting merchandize to be ordered as inventory.
It is important work, since having the right inventory and the right amount of inventory is crucial to the overall well-being of the store's business. The employer indicates the number of expected hours in writing or based on an agreement with the employee. Employees classified as both salaried and exempt receive the minimum weekly wage for salaried workers, plus they are exempt from the FLSA regulations on overtime pay based on their job duties and responsibilities. Employees who work in an administrative, executive or professional capacity generally are exempt from overtime rules because the work involves duties related to the company's management.
Some outside sales personnel and employees in computer-related occupations are exempt as well. The criteria for exempt classifications vary; however, a common thread in the exempt status criteria is that employees must use independent judgment in performing the majority of their job duties. Exempt workers do not receive overtime pay, yet the company expects them to work as many hours as it takes to fulfill their job duties, even if they have to work more than 40 hours during the workweek.
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