When creating a new position within your company, determining whether to classify it as exempt or non-exempt is an important decision. It carries significant weight, influencing compensation structures, work arrangements and overall adherence to labor regulations.
Several key factors should guide your decision.
Job duties and responsibilities
To start, carefully review the job duties and responsibilities of the new position. Exempt roles are usually more complex and involve making important decisions and working independently. If the position requires employees to make their own judgments, supervise others or play a significant role in the organization’s strategy, exempt classification is more likely.
Work hours and overtime
Evaluate the expected work hours for the new position. Non-exempt roles typically adhere to standard workweek hours and are eligible for overtime pay when exceeding this limit. If the nature of the job demands a rigid adherence to specific hours, non-exempt classification may be more appropriate. On the other hand, exempt roles often involve flexible schedules, accommodating the varying demands of the position.
Compensation structure
Examine the compensation structure for the new job. Non-exemption includes entitlement to overtime pay, which may impact the overall cost of the position. Ensure that the compensation aligns with industry standards and the responsibilities associated with the role. Bear in mind that under the FLSA, exempt positions must usually pay at least $35,568 per year.
Employee morale
Consider the potential impact on employee morale. Fairness and equity are necessary for maintaining a positive work environment. If the new position shares characteristics with existing exempt roles, maintaining consistency in classification can contribute to a sense of fairness among employees.
Thoughtfully assessing the position and giving attention to federal and state guidelines should make it clear whether to designate the new role you are creating as exempt or non-exempt.
