Salaried Exempt vs Hourly Non-Exempt Employees
There are two basic types of employees in the workplace, Salaried Exempt employees and Hourly Non-Exempt employees. What’s the difference between these types of workers and the jobs they hold? The most significant difference is pay for overtime work. The term “exempt” means exempt from being paid overtime, but also includes other wage and hour regulations such as rest and meal breaks.
Let’s review some of the regulations which govern whether an employee should be exempt from receiving overtime pay.
Salaried Exempt
This is acceptable if the employee qualifies under the exempt regulations which include a minimum salary of $45760 on January 1, 2019. It’s important oreview your current salaried exempt employees to be sure they meet this increased pay threshold as well as the job duties below.
Most employees that are exempt will fall into one of the 5 most common categories:
Executive/Managerial: Must have control over, and manage more than 2 employees
Administrative: High-level administrative assistant or department head
Outside Sales: Must be primarily engaged in outside sales activity
Professional: Teacher, Accountant, Medical professional, etc
Computer Professional: Primarily works in a digitally based creative or artistic position
Titles alone do not dictate or qualify an employee for exempt status. In most or all of these cases, the employee must customarily and regularly exercise discretion and independent judgment and work more than 50% of the time in this capacity.
It’s important to also understand that true exempt salaried employees have only limited situations where you can deduct pay for missed hours or day. Typically, if any work is performed in the course of a week, the employee is due pay for the full week regardless of number of hours worked. There are exceptions to this in the case where an employee is out on a personal day and has no vacation or sick time available.
Non-Exempt Employees
A non-exempt employee is entitled to minimum wage, and overtime pay in California. Most employees must be paid the minimum wage, $11.00 for less than 25 employees and $12.00 for more than 25 employees, for regular time and at least time and a half for any hours worked over the standard 8 in a day or 40 in a week.
Failure to classify an employee properly could result in significant fines for overtime violations including backpay, penalties and interest, so best to get this one right.
If you are considering an exempt pay structure for an employee, or some other pay structure where you are unsure of the related regulations, please contact your support team at Infinium HR Group for assistance at info@infiniumhr.com.