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Are all salary based employees considered exempt or can they be non exempt?

A salaried employee can be either exempt or non-exempt. An employer can put any worker on salary simply to make processing payroll easier — even a plumber, waiter, front desk clerk or any other employee. However, simply putting the employee on salary DOES NOT make the employee exempt. The plumber, waiter or front desk clerk is still entitled to overtime when he or she works more than 40 hours in the week. And, the non-exempt salaried employee can be paid less if he or she works less than 40 hours in the payroll week.

Under the federal FLSA or Fair Labor Standards Act, 5 classes of salaried employees can be exempt, depending upon their primary duties: Executives, Outside Sales, Computer Pros, Professionals, and Administrators. An exempt employee must be paid the same salary every week, regardless of the quantity or quality of work. (Under some circumstances, if the exempt employee misses one or more full days due to illness or personal business, their salary can be reduced for that week.) Exempt employees are never entitled to overtime.

However, there is no law that ANY employee MUST be treated as an exempt employee. A company could pay even the CEO on an hourly or salaried non-exempt basis, thereby making that employee non-exempt.

When an employer treats an employee as non-exempt (i.e., reducing the employees salary based on the number of hours worked in the week) the U.S. Department of Labor has consistently ruled that the employee never was exempt, and is entitled to overtime for the past 3 years.

There are some exceptions to the exempt employee rules under ADA and FMLA. If those apply, please post another question.

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This entry was posted on Saturday, September 12th, 2009 at 4:16 pm and is filed under
Compensation, Human Resources Management.
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