Exempt, non-exempt, salaried vs. hourly, overtime vs. straight time…it’s confusing right? Not to the Department of
Labor. That regulatory agency knows all the rules…like it’s okay if you don’t pay overtime to an hourly employee working in a computer occupation as long as he or she makes at least $455 a week or not less than $27.63 an hour and meets some other requirements.
The DOL has been cracking down in recent years on companies that classify and pay employees incorrectly. They have a 65 page PDF that explains exactly what the Fair Labor Standards exempt standards are—including that random $27.63. I know, because I’ve read it about 100 times.
For example, an employee might be exempt if his or her primary duty consists of:
1) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
2) The design, development, documentation, analysis
, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
3) The design, documentation, testing, creation or modification of computer programs related to
machine operating systems; or
4) A combination of the aforementioned duties, the performance of which requires the same level of skills.
Then it lists exceptions.
I’ve had clients say “Don’t worry about it, Caroline; everybody here works 40 hours.” (People love to tell me to take a chill pill. They don’t really understand that I’ve seen the bridge they’re about to drive off.)
But then comes the employer who is so sure everybody’s working only 40 hours that he doesn’t require his hourly employees to clock their time. And one savvy employee, working more than 40 hours a week, makes a log of all the overtime she’s putting in without getting paid for it. When she leaves the company, three years later, she heads over to the Department of Labor and shows them her documentation. The employer didn’t have any documentation (Chill Caroline!), so it was her documentation against their protestations. Guess who won? The employer ended up having to pay her all the claimed over time and pay a fine to the DOL.
So some salaried employees meet the definition of non-exempt and overtime eligible but not all hourly employees must be paid overtime. There are specific job descriptions, skill sets and circumstances under which someone can work hourly and not get paid overtime. And those rules can be pretty complicated. The way you write the job description can make a difference to whether the employee is exempt or non-exempt from overtime pay.
Regulatory agencies don’t do this for fun. All the laws they make, even the random-seeming ones, are based on efforts to protect people and employers from unfair treatment. There are, however, a lot of them. And unless you want to really memorize that 65- page document, this might be a good time to work with an HR professional to make sure your employees are classified correctly and you’re paying them according to what federal, state and local laws require.