Think Your Workers Are Exempt? Think Again!

Very specific requirements have to be met to salary a worker. As a PEO, we can help! Whether it’s auditing your current staff or reviewing what is Human Resource’s practice for new hire packet forms for employees, the last few months of the year are a good time to make sure things are in line for the next year.

Answering What Is Human Resource’s Most-Asked Question: Workers Exemption

In all the time I have worked in Human Resource and Payroll, the question I’ve received most relates to Fair Labor Standards (FLSA) exempt vs. non-exempt employee classification.  Basically, that means who can be paid on a salary-basis, not subject to overtime.   The question has come in a variety of forms but it generally looks something like this:

“I have a lead plumber who supervises some of my other workers.  I made him salary.  Is that okay?”

It’s soon followed up with:

“What?!  Well, why not?!”

On average, over 60% of the employee force in the United States is considered “blue-collar.”   The Department of Labor (DOL) takes special notice of these workers.   This is surely due, in part, to the fact that many blue-collar business owners think that if an individual supervises other workers, exempt status is appropriate.  WRONG!

The Department of Labor Definition of a Blue-Collar Worker

The DOL defines a blue-collar employee as a “manual laborer… who performs work involving repetitive operations with their hands, physical skill and energy. “  Generally, a blue-collar employee gains their skills through on-the-job training and apprenticeships, and the exemptions normally do not apply.

How Management Can Qualify for Human Resource and Payroll Exemption

So why don’t many supervisors and others in management qualify?  Well, they must fall under one of the categories below to receive the exemption:

  • Administrative
  • Computer
  • Executive
  • Professional
  • Outside Sales
For purpose of this article, the “Executive” classification would be appropriate and ALL of the following criteria must be met:
  • The employee must make a salary of at least $455 per week
  • The employee primary duty must be managing the business itself or a department or subdivision of the business
  • The employee regular job duties must include managing or directing at least two full-time workers or the equivalent
  • The employee must have the ability to hire and fire, or their input must carry significant weight on those and other status decisions

How Does That Change Your Human Resource and Payroll Practices?

Does this change how you are classifying your employee force?  Will you address new hire packet forms in a different manner?  Helping to keep your business, human resource, and payroll compliant is a top priority for Employers Resource as a professional employer organization.  Let us know how we can help.


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