Exempt vs Non Exempt: Frequently Asked Questions!

1. Can you re-classify an employee from exempt to nonexempt?  

Yes, it is possible to re-classify an employee from exempt to nonexempt — or the other way around. In fact, it’s not uncommon for employers to re-evaluate employee classifications and make changes as necessary to comply with wage and hour laws. 

To reclassify an employee from nonexempt to exempt status, the employer must ensure that the employee’s job duties and salary meet the requirements for one of the FLSA exemptions, such as the administrative, executive, or professional exemption. The employee’s job duties must primarily involve managerial, professional, or administrative tasks, and they must be paid a salary that meets the minimum threshold set by the FLSA. 

However, it’s important for employers to handle the reclassification process carefully and fairly. Employers should communicate with the affected employee(s) and explain the reasons for the reclassification. Employers should also make sure that the employee’s new pay rate and other benefits are adjusted accordingly. 

2. How do I determine if an employee is exempt or non-exempt? 

Employee classification is based on various factors, including job duties, salary, and specific exemptions outlined by the Fair Labor Standards Act (FLSA). It’s crucial to assess these factors carefully. And can be reference on the DOL Fact Sheet here. 

3. Is it better to be exempt or non-exempt?  

Whether it’s better to be exempt or non-exempt depends on individual circumstances and preferences. Some employees may prefer the stability of a set salary and benefits, while others may prefer the opportunity to earn more money through overtime pay. Ultimately, it’s important for employees to understand their job duties and compensation structure to make an informed decision. 

4. Can highly compensated employees ever be eligible for overtime pay? 

The Supreme Court has held that highly compensated employees are eligible for overtime payment if their compensation is calculated solely on a daily basis. A daily rate worker does not qualify as salary exempt simply because their daily pay rate is above the minimum amount to qualify for exemption from FLSA requirements. 

Employees that are paid on a daily or hourly basis may still qualify for exemption from overtime pay, so long as an employer also provides a guaranteed weekly amount approximating what an employee usually earns in addition to the other requirements. 

5. Can a part-time employee be exempt?  

Yes, the number of hours worked isn’t a criteria for determining classification, so if a part-time employee satisfies the three tests for exemption (salary basis, salary level, and job duties), then they’re classified as exempt.  

6. Are independent contractors exempt or nonexempt?  

Independent contractors may be considered “exempt,” as they aren’t covered by the FLSA — however, exempt and nonexempt statuses generally apply to employees. Independent contractors aren’t employees.   

7. What is the white-collar exemption?  

The white-collar exemption is another way to refer to the job duties test for determining employee exemption. If an employee’s role is executive, administrative, or professional — usually office worker or “white collar” positions — the employee is exempt from overtime protections.