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Exempt Employees

Exempt Employees. FLSA – Fair Labor Standards Act—basis for determining exempt status Some states have laws that further limit who can be an exempt employee State or federal?—whichever is best for the employee. Who Is Exempt?.

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Exempt Employees

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  1. Exempt Employees • FLSA – Fair Labor Standards Act—basis for determining exempt status • Some states have laws that further limit who can be an exempt employee • State or federal?—whichever is best for the employee

  2. Who Is Exempt? • Exempt employees – paid to do a job, regardless of time, effort, quality or quantity of work • Exemption does not depend on job title, rather on job duties and compensation • Risk class action lawsuits and audit of all employees if misclassify as exempt

  3. Non-Exempt Employees • Must be paid for all hours worked • Must be paid overtime if applicable • THERE IS NO SUCH THING AS COMPENSATORY TIME OFF (CTO) • Must take meal and rest breaks if required by law

  4. California Employers • Must track hours worked by non-exempt employee, including meal periods • “Premium Wage” (penalty) if California employees do not receive required rest breaks and/or meal breaks

  5. Non-Exempt Employees,continued OVERTIME • AZ – over 40/week • CA – State law – over 8/day, 40/week • CO – State law—over 12/day, 40/week • NV – State law – over 8/day, 40/week

  6. Non-Exempt Employees,continued OVERTIME • NM—over 40/week • OR—over 40/week • TX—over 40/week

  7. Non-Exempts and Overtime • Regardless of overtime law, may need a non-exempt employee to come in early, stay late, work on a weekend • Either pay the overtime as required in your state, or • Flex the workday/workweek

  8. Non-Exempts and Travel Time • Requirements vary by state • Be sure to review your state law as well as your policy before you have a non-exempt employee travel on business

  9. Independent Contractors • It’s a great idea ………………….. • But, don’t do it, unless YOU ARE POSITIVE the person is truly an independent contractor

  10. Independent Contractors, continued • Use independent contractor agreement • Avoid control • Independent contractor should use own tools • Independent contractor is NOT an employee—don’t treat as one • No reimbursement of expenses

  11. Independent Contractors, continued • Independent contractor should have other clients • Ask for proof of independent contractor status • Document insurance coverage • Document payment for services • When in doubt, call legal counsel

  12. Independent Contractors, continued • Independent contractors should not be performing job that is critical to the organization’s business or purpose for existence • Be sure to check state rules – some states do have strict requirements • IRS and other taxing agencies use different rules

  13. Resources Exempt Employees U.S. Department of Labor’s website – information on the FLSA exemptions: http://www.dol.gov/index.htm California http://www.dir.ca.gov/dlse/dlse.html

  14. IRS Independent Contractors • IRS Independent Contractor info: http://www.tax.ca.gov/icore.bus.html#Federal www.irs.gov/pub/irs-pdf/p1779.pdf www.irs.gov/businesses/small/article/0,,id=99921,00.html www.irs.gov/taxtopics/tc762.html

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