Employee Classification Checklist for FSLA Compliance – Exempt or Non-Exempt
Employers must properly classify their employees as either exempt or nonexempt from overtime pay under the Fair Labor Standards Act (FLSA). A key distinction between workers who are exempt from overtime pay and those who are not is that exempt workers are paid for the work performed, not the number of hours worked, earning a set salary rather than an hourly rate. Another key distinction is made with the salary basis test. Workers earning less than the minimum required salary of $913 per week are considered non-exempt and subject to FLSA overtime provision.
Employees who are paid a weekly salary of at least $913 must also meet the Department of Labor’s standards for one of six categories outlined here to be classified as exempt from overtime pay. Employees not in these categories are generally non-exempt from overtime.
Use this checklist to see if you are classifying workers who are paid a weekly salary of at least $913 correctly as exempt or non-exempt employees.
- Is the employee’s primary role to manage the business or a department or business unit of the business?
- Does the employee direct the work of at least two other employees?
- Does the employee have hiring and firing authority, and if not, do the employee’s recommendations carry significant weight in the final decision?
- Is the employee’s primary job function to perform office or non-manual work directly related to management or general business operations?
- Does the employee regularly use discretion and independent judgment in matters of significance as part of the job?
Outside Sales Employee
- Is the employee’s primary responsibility to make outside sales?
- Does the employee regularly work away from the company’s place of business?
- Does the employee sell items or secure orders or contracts for services or the use of facilities?
- Is the employee paid at least $27.63 per hour or $913 per week on a salary basis?
- Does the employee’s primary work involve computer systems or programs analysis, design, or development, or testing of systems or programs, or a combination of analysis and development?
Creative Professional Employee
- Does the employee’s primary work require talent, invention, or originality in a recognized creative field such as music, acting, writing, and the graphic arts?
Learned Professional Employee
- Does the employee’s essential work require advanced knowledge in an area of science or learning gained by specialized instruction resulting in a four-year college degree?
A “No” answer to any of these questions indicates you may be misclassifying exempt employees
If you answered “No” to any of these questions, the employee may be misclassified as an exempt learned professional.
If you answered “No” to any of these questions about the essential job functions of employees you have classified as exempt from overtime, you may be misclassifying exempt employees. You should look at employees’ job descriptions compared to FLSA regulations, talk to employees’ direct supervisors, and bring the matter to the attention of management. When violations are found, the Labor Department takes action to recover wages for misclassified employees, sometimes reaching millions of dollars in back pay obligations, plus penalties.