Name: jeff kuzmich - Migrate_OD_Exempt_or_Nonexempt_07302025_4983532
Uploaded: 2026-02-26T05:54:41.594Z
Duration: 10 min 46 s
Description: jeff kuzmich - Migrate_OD_Exempt_or_Nonexempt_07302025_4983532

Transcript for "jeff kuzmich - Migrate_OD_Exempt_or_Nonexempt_07302025_4983532": Hi there. Welcome to Exempt or Get Employee Classifications and Pay Right. My name is Amy Crisofulli, and I'm an HR Business Partner here at Paychex. Before we get started, I do have to say as a legal disclaimer that this presentation does not constitute any legal or accounting advice and is for informational purposes only. Today we're going to demystify employee classifications so you can get payroll right every time and on time. We will be covering topics to help you understand the differences between exempt and non exempt staff, learn salary thresholds and duties tests that define classifications, identify the risks and consequences of employee misclassification, and ensure payroll accuracy and protect your business from compliance penalties. Before we get started, I've just got a quick poll for you to take. You'll see it pop up on your screen. There's no right or wrong answer. I just want to learn more about what your comfort level and concerns are with employee classifications and compliance. This will help us better customize future trainings. Here's the poll. What is your biggest challenge when it comes to classifying your employees? A. Understanding the relevant laws B. Determining the right classification for each employee C. Getting payroll right or D. All of the above and more Now, no matter what you answered, I'm going to walk you through the common class ifications that you need to know for your business. So let's dive in. All employee classifications must comply with the Fair Labor Standards Act, or FLSA for short. This federal law enacted in 1938 protects workers against unfair employment practices and also establishes standards for minimum wage, overtime, child labor, and record keeping. While the law does set basic standards, there are several employment practices that the FLSA does not require, including vacation, holiday, severance or sick pay, meal or rest periods, holidays off, or vacations, premium pay for weekend or holiday work, pay stubs or Form W-two, pay raises or fringe benefits, or a discharge notice, reason for discharge, or immediate payment of final wages to terminated employees. These practices are generally determined by the employer and or state law. So what is a nonexempt employee? Under the FLSA, nonexempt employees must receive at least minimum wage and overtime pay. That's one and a half times the regular rate for hours over 40 in a week. While we most often see these employees paid hourly, nonexempt employees may also be paid on a salary, day rate, job rate, piece rate, or commission basis. So what does nonexempt mean? Non exempt employees are employees who are subject to all provisions of the FLSA. These employees may perform work that is routine, with set standards and rules. Some examples of non exempt positions may include bank tellers, certain office personnel, restaurant workers, or maintenance workers. And what is an exempt employee? Under the FLSA, exempt employees are not entitled to minimum wage or overtime pay. Generally, exempt employees must receive a minimum weekly salary, which is outlined in federal regulations. Just please note that some states do have their own minimum weekly salary that employers must follow. Exempt employees must also meet certain job duty requirements to be considered exempt. Exempt roles often involve independent judgment, specialized skills, or supervising others. The biggest misconception many employers have regarding exempt versus nonexempt is that the method of compensation alone determines this classification. To help clarify the definitions between exempt and nonexempt, exempt employees are usually paid on a salary basis and must meet three tests: Salary level, the minimum set amount Salary basis, same pay each week and Job duties, professional, executive, or administrative work. In summary, the differences between exempt and nonexempt employees include their primary duties, how they're paid, and possibly how much they're paid. To ensure proper classification, employers should fully understand what skills are required to perform a job and ensure that each employee is paid in accordance with the FLSA and applicable state laws. Okay, so now that we've gone over the basics of employee classification, let's do a quick truefalse exercise around the trigger points that can trip up employers. So number one. Only hourly employees can be nonexempt. False. Salaried employees can also be eligible for overtime based on salary level and job duties. Number two. All part time employees are nonexempt. False. The salary threshold and duties test still apply regardless of an employee's full or part time status. And number three. The job title determines exempt status. This one's also false. An employee may have a title that suggests their position as exempt. However, that does not necessarily mean the employee is automatically eligible for an exempt classification. Rather, a salary level, salary basis, and primary duties analysis should be performed. Misclassifying employees can lead to fines, penalties, and back wage payments. Investigators from the U. S. Labor Department's Wage and Hour Division are tasked with conducting investigations to ensure employment conditions and practices are following the law. You can never deny overtime pay for nonexempt employees, even if the employee works unauthorized overtime. If the court deems that a manager or owner has willfully denied overtime pay to nonexempt staff, they can be held personally liable. In reality, most small employers aren't violating the law intentionally they just don't have the resources to know better. And that's why it's critical that you take proactive steps to run your payroll correctly and stay in compliance. Let's take a look at the ABCs of Compliance best practices. We want to review and understand the rules and regulations outlined by the FOSA regarding exempt versus nonexempt classifications. Next, turn your attention to your state, as several states have their own regulations around this subject. Regularly review time records for accuracy and make sure any changes made to time worked are approved by both the supervisor and the employee. Consistently review, update, and use job descriptions to ensure employees performing similar duties are classified consistently. And do not base FLSA classification on the job title or person in the job. Do base classification on the actual job duties performed. Classifying all salaried employees as exempt is another mistake employers make. Remember, hourly and salary are just methods of payment, not classifications. Make sure you are factoring in job duties when determining classifications. Don't leave best practices to chance. Avoid missing key actions by having a process in place for correctly classifying your employees. Taking time upfront helps ensure compliance and avoids costly mistakes later. So let's recap what we've learned today. Employee classifications matter. It's critical to correctly classify employees as exempt or nonexempt because it determines their wage and overtime rights under the law. To qualify as exempt, employees must meet salary level and job duty requirements, not just be paid a salary, but also perform specific types of work. Miss classifying employees can lead to serious penalties, including fines, back pay, and legal risks, making proper classification essential for compliance and cost control. I hope through all of this I've made you curious about what we do. Paychecks can help to ensure you're classifying your employees correctly, and Paychecks Flex offers customized payroll packages to fit your business needs. We can help you with classifying employees' overtime status correctly, checking your job descriptions against the FLSA and other employment laws, and automatically calculating overtime hours, alerting you when employees are approaching overtime, and easily tracking hours worked. We can also pair you with a payroll support specialist to help you maintain compliance and avoid costly fines and penalties. As a business owner or manager, we want you to stay focused on what you do best running your company product or servicing your clients. Let us help you with employee classifications so you can stay focused on where your business needs you the most. We've got one last quick poll for you and it will pop up on your screen. If you'd like to speak with a paycheck sales professional about how we can support your business, just click Yes to the poll and one of our team members will reach out to you within the next business day. Thank you again for your time today reviewing our webinar on Exempt or Get Employee Classifications and Pay Right.