When it comes to determining whether an employee qualifies for salary (exempt) status under the Fair Labor Standards Act (FLSA), the criteria primarily revolve around their job duties. Here’s a simplified explanation:
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- Executive Duties: If the employee’s primary job duties involve managing other employees, such as assigning work, making hiring or firing decisions, or supervising staff, they may qualify for exempt status. For example, managers, supervisors, and team leaders often fall into this category.
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- Administrative Duties: Employees whose primary duties involve office or non-manual work related to the management or general business operations of the employer or its customers may also qualify for exempt status. This includes tasks like financial management, HR administration, or overseeing company policies.
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- Professional Duties: Professionals who perform work that requires advanced knowledge in a specialized field and involves the exercise of discretion and judgment may be exempt from overtime pay. Examples include doctors, lawyers, engineers, and teachers.
It’s important to note that merely having a certain job title or being paid a salary does not automatically qualify an employee for exempt status. The key is to assess the actual job duties performed by the employee to determine if they meet the criteria outlined above.
Additionally, the salary level is another important factor. As of the last update, the salary threshold for exempt status under federal law is $684 per week ($35,568 annually). This means that even if an employee’s job duties meet the criteria for exemption, their salary must also meet or exceed this threshold to qualify for exempt status.
Employers should carefully evaluate each employee’s job duties and salary to ensure compliance with the FLSA and any applicable state labor laws. Consulting with an HR professional or employment law attorney can provide guidance in correctly classifying employees and avoiding potential legal issues related to misclassification. Using QuickBooks can help streamline your payroll process and ensure accurate classification of employees under the Fair Labor Standards Act (FLSA).
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