Accurately classifying job roles as exempt or non-exempt is crucial for employers. Misclassification or failure to pay overtime can lead to costly penalties.
Here’s a quick guide to help you navigate these classifications.
Exempt Employees
Exempt employees are typically salaried and not eligible for overtime pay. They usually work in office or non-manual settings and are expected to work around 40 hours per week, though the Department of Labor (DOL) doesn’t mandate a specific number of hours. To qualify as exempt, employees must meet the following criteria:
- Salary Threshold: Minimum annual salary of $43,888 (or $844 per week); increasing to $58,565 1/1/2025.
- Consistent Salary Basis: Must receive a consistent salary regardless of hours worked.
- Job Duties Test: Perform high-level duties that often involve specialized skills in an office setting. Job titles alone don’t determine exempt status; specific job duties and salary must align with DOL requirements.
Non-Exempt Employees
Non-exempt employees are hourly workers entitled to overtime pay for any hours worked beyond 40 in a week. Overtime is calculated at 1.5 times the regular hourly rate.
Ensure Compliance
Understanding and applying these classifications correctly helps you avoid legal and financial risks. Need help? Connect with an aHRrow expert to ensure your classifications are accurate and compliant with current regulations.