What You Should Know About Employee Classifications
Too often, I find there is a huge misunderstanding about employee wage classification. Accordingly, this month’s blog provides a very narrow look into Fair Labor Standards Act (FLSA) rules that affect you as an employer. Compliance with the FLSA is something you should take seriously. In 2008, the Department of Labor recovered $220 million in back wages and employees are filing a record number of lawsuits under state and federal wage and hour laws.
The rules tend to be a bit confusing. However, start by no longer referring to your employees as “salaried” or “hourly.” In doing so, you might make certain inaccurate assumptions. Instead, the proper way to classify employees should be “exempt” or “non-exempt.”
What is the difference? A non-exempt position must receive payment of at least minimum wage on a salary, hourly, piece rate or commission basis and is subject to the overtime rule while exempt status is reserved for true office managers. I emphasize “true” because the classification does not revolve around an employee’s title. It revolves around the actual job duties. Many “office managers” do not get the level of responsibility necessary to fit this job description. Just because a staff person is assigned the title “office manager” or is “salaried,” that does not necessarily qualify him or her for exemption.
To clarify, an exempt employee must be salaried. However, a salaried employee may be non-exempt. Non-exempt is the proper classification for the overwhelming majority of podiatric staff.
Some employers assume that because their business is small, they are not covered by the rules of the FLSA. Unlike most state and federal employment laws, the FLSA rules do not depend directly upon the number of employees. While proper exempt/non-exempt classification may seem vague, the repercussions and penalties for non-compliance are very real. Keep in mind too that when non-exempt employees volunteer to take work home, work through lunch, work overtime and waive overtime pay for doing so, it is not legal.
Finally, please note that state law supersedes federal. Accordingly, in cases of overtime and comp time, you should refer to your own state jurisdiction. Heed the warning. While these issues might not ever present a problem in the “harmonious” workplace, they could become a serious bone of contention in the event of a parting of ways.
Download a free slide presentation created by the US Department of Labor that helps explain more about FLSA federal law at: http://www.dol.gov/whd/regs/compliance/fairpay/presentation.ppt .