How does one determine whether a salaried associate should be exempt or non-exempt? I have read all the legalese but am still puzzled about how to make that determination when the managers actually do some of the work of there associates.
Suppose the position’s duties and essential functions fall under the guidelines for executive (long test) except the individual devotes more than 20% of the hours to activities not closely related to those listed as exempt duties.
Thanks
Exempt status is regulated by the Fair Labor Standards Act (FLSA). When determining exemptions, employers must first consider the way in which the employee is paid (hourly vs. salaried), then they must review the duties and responsibilities of the job. Although, there are a number of unique position that provide for exempt status. The majority of employers must use what is referred to as the “white-collar exemption tests” to determine exempt status. There are four main exemptions, executive, administrative, professional, and out-side sales, that positions can be placed in based upon the duties and responsibilities of the job. The determination is never, never, made based upon the job’s title or the manner the position is paid.
Specifically, when a manager is a “working manager” and performs the same tasks as his employees, the determination must be made by the percent of time spent on exempt duties vs. the time spent on non-exempt duties. I spoke to Joan Stern, Investigator for the U.S. Department of Labor, Wage and Hour Division, about this issue. She emphasized to me the importance of this percentage when making this determination in her investigations. As the regulations state, the position “must devote no more than 20 percent (less than 40 percent if employed by a retail or service establishment) of his or her hours worked to activities not directly and closely related to the managerial duties.” Therefore, when you assess the position’s duties, how much time is spent on non-exempt duties? If it is more than 20 percent, the position is non-exempt.
I generally recommend companies make the exempt determination with a conservative eye. They are always better off designating a position as non-exempt that may be a borderline exempt position.