Exemptions for highly-paid employees can be confusing
The wage and overtime exemptions of the Fair Labor Standards Act are often considered in terms of occupation - administrative, professional and outside sales being common applications.
However, the FLSA also excepts certain workers from sections of the law if they receive a large amount of pay, which is known as the highly compensated worker exemption. To qualify, an employee must make at least $100,000 a year with at least $455 of those earnings coming on a weekly salaried basis, their work includes little or no manual labor and they perform one or more duties commonly executed by a administrative, professional or executive worker.
Confusion can stem from deciding whether to apply the occupational or highly compensated employee exemption to a specific worker, and misclassification may lead to a high liability for a company - employee attendance and time being particularly valuable when such a worker earns six figures.
The recent case of a pharmacist who sued his employer over classification and miscalculated pay, reported by HR.BLR.com, is an example of why proper categorical placement and exemption application are vitally important for businesses that use highly paid workers. Additionally, using time and attendance software to track hours worked helps employers remain complaint with the FLSA.
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