Major Employee Groups (exempt and non-exempt) that Make up an Organization
Julie Lindelien
Saint Leo University
HRA 562- Compensation: Strategic Perspective [ November 4, 2012 ]
Dr. Richardson

Abstract

A majority of jobs are overseen by the Fair Labor Standards Act (FLSA), while some are not a part of the FLSA coverage by statute of the job. Others jobs are mandated by the FLSA but are considered to be exempt from the FLSA overtime rules (www.flsa.com/coverage.html). The FLSA of 1938 was put into place to addresses issues that had intensified during the depression when the United States was transitioning from one of agriculture to industrial enterprises. Exempt and non-exempt take into consideration the status of an employee in regards to their overtime pay under FLSA and if the employees position does not come under a particular category i.e. administrative, professional, and executive, then that job is considered to be covered by overtime and minimum wage provisions (Martocchio, 2011).

Major Employee Groups (exempt and non-exempt) that Make up an Organization
Employee groups come under two general headings, those of exempt and non-exempt. Both take into consideration the status of an employee in regards to their overtime pay under FLSA and if the employees job doesn't fall into a certain category i.e. administrative, professional, and executive, then they are generally covered by overtime and minimum wage provisions (Martocchio, 2011). The FLSA was written in order to protect workers such as those in textiles, from being required to work long hours without being compensated with extra money. In addition, it was an incentive for the employer to hire additional workers rather than pay overtime, because years ago, it was more expensive to pay overtime than it was to hire additional workers (www.purdue.edu/hr/LeadingEditin/LEdi_704_exempt_nonexempt.html). The black and white of exempt vs. non-exempt is, who gets overtime pay and who doesn't. Those who are deemed as exempt are not paid 1.5 times their wage, from overtime regulations and minimum wage laws, and the non-exempt employee has to be paid for every hour over their scheduled shift in overtime. Each state in accordance with their laws and those of the FLSA, regulates what constitutes the law of overtime in their state. If an organization is unaware of the difference between those of exempt and non-exempt, can be costly for them. Being labeled either exempt or non-exempt has very little to do with one's job title or if they are a salaried employee or not, but more in tune with what the employee's level of responsibility, supervision or their status as a professional. For the majority of employee's whether they are exempt or non-exempt depends on three factors: how much they are paid; how they are paid; and type of work they do (www.flsa.com/coverage.html).
Exclusions from FLSA coverage
Some jobs are covered under other acts rather than the FLSA when pertaining to overtime. There are two main exclusions under FLSA in regards to exempt and non-exempt employees. Some exclusions are excluded from the statue itself, while others are governed by another labor law completely. An example of the first is someone who works in agriculture and not governed by the overtime rule and the other such as those who work for the railroad, are governed by the Railway Labor Act or truckers by the Motor Carriers Act and not FLSA (www.flsa.com/coverage.html).
Exempt
According the FLSA, exempt employees are not entitled to or mandated to have overtime pay. By definition, some jobs are classified as exempt i.e. an employee who works outside are considered exempt. To be an exempt employee they must make at least $23,600/year; be a salary paid employee and have job tasks that are considered to fall under the exempt category. The employee must meet all three in order to be considered "exempt" (www.flsa.com/coverage.html). Those in the exempt category, do not receive overtime pay even when they work greater than 40 hours/week.
Employees that are exempt often in the creative field, interpret and apply policies, decide what the organization will do i.e. upper management, and have discretion in regards to the organization. Those in these positions may be: a financial analyst, investment counselors, and administrators. Others would be one's where an advanced degree is required or a position of creativity i.e. actors, writers, social workers, CPAs, and scientists. Those who are executives and supervise others are also exempt (www.purdue.edu/hr/LeadingEditin/LEdi_704_exempt_nonexempt.html).
Non-exempt
Non-exempt employees have the right to overtime pay; they are employees who are make less than $23,600/year. Those who work in a non-exempt position keep tally or a record on the amount of time they put into work. If they put in over 40 hours/week, then they are paid at 1.5 times their hourly rate.
Non-exempt employees generally hold positions such as opticians, nurses, customer service workers, gas station attendants, pharmacy assistants, office coordinators, skilled trades, technical and clerical, service maintenance, inside sales, production workers, etc... They are in positions where they need to explain procedures, apply policy and are usually supervised by another (www.purdue.edu/hr/LeadingEditin/LEdi_704_exempt_nonexempt.html).
Conclusion
Every organization looks at their positions to determine what jobs are applicable for exempt or non-exempt status. HR considers the primary purpose of the position being held and how the tasks fit with the purpose of the position. HR uses has several tools at their disposal from organization charts, comparison of similar positions and the FLSA guidebooks and even the Department of Labor (DOL). An organization need to scrutinize those positions in exempt status and if litigation is brought forth, have the ability to defend their decision(s). If they are found not justifiable, be prepared to pay back pay. From the beginnings of the FLSA, the intent of this act was/is to protect the employee from having to work long hours without compensation (www.purdue.edu/hr/LeadingEditin/LEdi_704_exempt_nonexempt.html).
The mere supervision of an employee is not sufficient enough for the employee to be exempt from overtime pay. The FLSA regulations contain lists of what they deem management duties are, so as not to receive overtime. The exempt employee is often said to have "no rights at all" under the FLSA overtime rules. The only entitlement under the FLSA, the exempt employee receives, is that of getting their full base salary in the period in which duties were performed (www.flsa.com/coverage.html).

References
Chamberlain, Kaufman and Jones. (n.d.). Fair Labor Standards Act (FLSA) Coverage (Exempt vs. Non-Exempt -- The Online Wages, Hours and Overtime Pay Resource. Fair Labor Standards Act (FLSA) Coverage (Exempt vs. Non-Exempt -- The Online Wages, Hours and Overtime Pay Resource. Retrieved October 29, 2012, from http://www.flsa.com/coverage.html
Martocchio, J. J. (2011). Strategic compensation: A human resource management approach (6th ed.). Boston: Prentice Hall.
Non-exempt and exempt: What do these terms mean and why does it matter? (2011). LeadingEdition. Retrieved October 29, 2012, from http://www.purdue.edu/hr/LeadingEditin/LEdi_704_exempt_nonexempt.html