Exempt vs. Non-exempt Employees

Minnesota has the strictest wage theft laws in the nation. There are potential civil and criminal consequences to an employer for failure to comply with wage laws. Complying with wage laws includes paying wages owed to employees such as minimum wage and overtime.

Generally speaking, employees fit into two primary categories: exempt and non-exempt. Neither the employer nor the employee get to chose the type of category. The categories have been chosen for you by laws, rules and regulations that have been enacted as well as case law.

The first step is to determine whether your business is subject to the federal or the state Fair Labor Standards Act (FLSA). For example, if you are subject to the federal FLSA, overtime is set at 40 hours per week while the Minnesota FLSA sets overtime at 48 hours per week.

The second step is to determine whether or not the worker is exempt. For example, Minnesota exempts seasonal fair, carnival and ski facility workers from overtime, but not minimum wage. In addition, while both the federal and Minnesota FLSAs exempt executive, administrative and professional employees, the factors used to determine the exemption differ under each of the Acts. If the worker does not fit without an exemption under the applicable FLSA, then they are a non-exempt employee. If they are a non-exempt employee then you are required to pay overtime and minimum wage.

The third step is to determine whether or not there are any local laws that are more restrictive than the state’s wage theft laws and to determine if those apply to your business. For example, Minneapolis has a higher minimum wage requirement than the state and federal requirements.

Now that you have determined whether each employee is exempt or non-exempt, now you need to make certain that you are not running afoul of the law. Below is a common way in which employers find themselves in a wage and hour dispute even when they have properly determined each employee category of exempt versus non-exempt.

The requirement to pay overtime and minimum wage to a non-exempt employee cannot be waived or modified, even at the request of the employee. For example, let’s say that your business is subject to the federal FLSA. Your employee, Sally’s daughter is getting married later this month and Sally is a non-exempt employee. Therefore, she and you agree that she can work ten extra hours for the first three weeks, and only work ten hours on the fourth week of the month when her daughter is getting married. However, not only does this create an overtime issue of ten hours per week for the first three weeks, but it also creates a minimum wage issue because your business is in the City of Minneapolis, which has a higher minimum wage requirement. The fact that Sally requested this accommodation does not make you allowing it legal. If Sally was to bring a wage and hour claim, most likely your defense – she requested it, she wanted it – would not pass muster.

Spangler and de Stefano, PLLP assists business owners with wage and hour compliance.

The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.