Non-Exempt Employees - Definition and Requirements

New Changes to the Non-exempt Classification

More employees will receive the non-exept classification and become eligible for overtime pay going forward.
ColorBlind Images/Blend Images/Getty Images

Non-exempt employees are employees who, because of the type of duties performed, the usual level of decision-making authority, and the method of compensation, are subject to all Fair Labor Standards Act (FLSA) provisions including the payment of overtime. Non-exempt employees are normally required to account for hours and fractional hours worked.

Employers must compensate non-exempt employees for all hours worked overtime at the premium (time-and-one-half) rate of pay.

All states have this requirement for overtime hours as a result of the FLSA and its FairPay revisions of August 2004 which take precedence over state laws.

Much attention has been directed at the appropriate classification of non-exempt employees since these revised overtime rules were signed into effect. While many exempt employees, reclassified as non-exempt employees, gained the ability to earn overtime, others, such as team leaders who were considered non-exempt employees, lost their overtime pay eligibility as newly exempt employees.

Changes to Non-exempt Employment - Again

In sweeping changes that will likely take effect in early 2016, the US Labor Department's new overtime rules change the minimum salary level for exemption from overtime from the current $23,660 to $50,440.

As implemented currently, the salary paid for doing a particular job is not the only definition of whether the job qualifies for overtime pay.

 The duties and responsibilities of the job are taken into consideration so many professionals, administrative employees, and employees with management titles are not eligible for overtime.

Under the changes to the law, everyone who earns less than $50,440 is eligible for overtime pay no matter their responsibilities.

Proponents of the new rules say that the new threshold is meant to protect workers from being taken advantage of by their employers. The current threshold has been in place for many years, is too low, and needs to become tied to the cost of living.

While the goal of this change by the President Obama-supervised labor department is to make more people eligible for time and a half for working overtime, the adoption of this new salary level is a huge step backward for workplaces that are no longer the industrial, manufacturing environments of the past.

Proponents believe that millions of employees will now become eligible for overtime pay and that employers will be forced to hire more employees to accomplish the work. I believe that employers will limit overtime and the law will force them to deal with a two-tiered social system in the workplace. The jury is out on whether this change will result in more employees hired.

The major change that will occur is a blow to the egalitarian culture that many workplaces have provided in recent years for employees.

No matter how you consider the situation, the new non-exempt from overtime pay rules create a two-tiered society in the workplace. Employees who are currently paid salary and are par and equal with all of the other salaried employees will now need to account for hours and punch a timeclock, so to say.

In American workplaces, a divide has always existed between hourly and salaried employees with salaried employees enjoying their status as elite. Salaried or exempt employees have never accounted for hours worked and are responsible for completing their whole job as they see fit during whatever hours they care to work in addition to the workday.

Newly non-exempt employees will no longer share this status. Employers who don't want to pay overtime will ask these employees to participate in some form of a timekeeping system. They will most likely forbid them to do email in the evening or work from home since these types of choices will only suit exempt jobs. This is a huge change from what many, currently exempt employees do now.

In workplaces that have steadily moved in the direction of remote work and telecommuting, employers who don't want to pay overtime will need to strictly forbid the newly-made hourly employees from working off the clock, and potentially from home. 

In customer service and technical support departments, employees will need to be paid overtime for holding customer conversations that extend beyond the eight hour day. These are just several of the examples that come to mind when the relationship of the new overtime rules relative to employees is considered.

Employees who are currently working as non-exempt employees will not experience a change. Current exempt employees will experience the biggest impact from the new overtime rules. In some cases, employees will appreciate the new overtime pay. My suspicion is that most employers will instead regulate working hours rather than pay employees overtime.

This will have an impact on the work, the accomplishment of goals, and the psyche and self-esteem of the newly-minted hourly employees - albeit they might get more pay.

Also Known As: Hourly Employee

Continue Reading...