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Exempt Position

Exempt positions are those that are exempt from overtime compensation under the white-collar and industrial exemptions of the Fair Labor Standards Act (FLSA). Employees in exempt roles must be paid on a salary basis, with a few exceptions.

Exempt employee: 

An employee who is exempt from the FLSA’s overtime restrictions because he or is classified as an executive, professional, administrative, or outside sales employee and fits the exemption’s specific conditions. Some computer specialists may be exempt as well. Exempt personnel must be paid on a salary basis, with a few exceptions.

Non-exempt employees, unlike exempt employees, earn overtime compensation in addition to their hourly salaries when they work more than 40 hours each week.

How do you classify Exempt Employees?

Exempt employees must meet the following requirements:

  1. Instead of being paid on an hourly basis, they are paid a wage. They get a monthly basic wage that is more than the FLSA standard, regardless of the number of hours worked in a week.
  2. The wages threshold for exempt employees changes every year. Employees must earn at least $684 or $35,568 per year by 2020. Employees that earn less than this are classified as non-exempt.
  3. In addition to obtaining a wage and meeting the income level, the employee must execute the work requirements listed for each category of an exempt employee.

Types of Exempt Employees:

Executive exemption:

  • It is necessary to monitor or manage two or more full-time employees or four part-time employees.
  • Must have power and be able to hire, fire, promote, or delegate tasks to staff.

Administrative exemption:

  • Do office or non-manual labour related to the business, management, or general business operations for the employers or their clients.
  • Without reporting to anyone, they should be able to make judgments and use their judgment.

Professional exemption:

  • Perform a work that necessitates specialized training in that subject to be able to judge and make decisions.
  • You must have a college or higher education degree in the relevant field to do the job.
  • Employees that apply their ingenuity, creativity and artistic talent on the job are considered.

Computer Exemption:

  • A System analyst, programmer, or computer engineer is a skilled person in the computer area who does the job.

Outside Sales Exemption: 

  • Work must be done away from the workplace or place of business.
  • Obtaining orders, contracts, and sales are among the main responsibilities.


Advantages of being an Exempt Employee:

The benefits of being an exempt employee begin with the assurance that you will get a consistent income. Exempt employees also earn more than hourly employees and have access to perks such as retirement accounts (IRAs), 401(k) plans, and pensions, as well as bonuses, employer-sponsored healthcare plans, and paid vacation and sick days.

Disadvantages of being an Exempt Employee:

The biggest drawbacks are that you are not entitled to overtime or minimum wage. Depending on your employer’s attitude, you may find yourself working long hours to complete an overburdened work portfolio with no option for more compensation or relief from the stress caused by the long hours.

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