Exempt or Non-Exempt: That is the Question

But what is the answer? Although the initial inclination may be to panic, start with the basics and dust off those job descriptions for review.

By now, most employers are aware that the U.S. Department of Labor (DOL) has issued a Proposed Rule that, if implemented in its current form, will mean millions of workers currently classified in a “white collar” exemption for executive, administrative, professional, outside sales, or computer work will become eligible for overtime.

Why will such a significant number of employees become eligible for overtime? The Proposed Rule seeks to change the salary threshold for exemption from $455 per week or $23,660 per year to a projected $970 per week or $50,440 per year, more than double the amount currently required to satisfy the salary-basis test. For many employers, it will be much more cost-effective to pay workers as nonexempt, overtime-eligible employees rather than increase their salaries so drastically.

A major increase to the minimum salary for exempt employees is highly likely. It is increasingly important for employers to review job descriptions for correct classification of those employees who will remain exempt after the law changes. Has your organization restructured or experienced growing pains? If so, chances are the actual work performed by employees has changed, and the current job descriptions may no longer accurately reflect the work being done, especially if a year or more has elapsed since the last review.

“A rose by any other name,” right? Not so. A job title alone is insufficient to establish the exempt status of an employee, and employers need to take a close look at whether both salary and duties meet the requirements of the regulations.