Misclassification of employees as exempt from overtime pay under the “white collar” exemption is the most frequent mistake that generates the greatest liability. In order to be exempt, an employee must satisfy both a duties test and a salary test. Now is the time for employers to take the necessary steps to ensure their compliance.
It is the duties requirements rather than the salary requirements that generate most liability to employers, and mistakes under the administrative exemption are most common. The current salary threshold for exempt status is $684 per week ($35,568 annually).
A “bona fide administrative employee” must:
1) have the primary duty of performing office or non-manual work directly related to the management or general business operations of the employer or its customers, and
2) have a primary duty that includes the exercise of discretion and independent judgement with respect to matters of significance.
The duties must be related to running the business and include discretionary decisions on significant business matters. If an employee merely applies standard procedures without exercising discretion on matters of importance, they are not exempt no matter how important their duties.