What is an exempt verses a non-exempt employee?

Minneapolis employment law attorney Greg Stenmoe discusses exempt and non-exempt employees.

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Transcript:

An exempt employee typically is someone who’s paid on a salary basis, they typically have some managerial responsibility, or they’re a professional. A non-exempt employee is someone who’s typically paid on an hourly basis and doesn’t have as much discretion. An exempt employee typically has to have discretion over making decisions in the business.

And there’s a lot of controversy over who’s an exempt and non-exempt, and you hear about employers who are trying to save overtime by calling somebody a manager or supervisor and then paying them an hourly or paying them a salary basis and not an hourly basis. And an example would be, if you have somebody who their basic job is to empty wastebaskets and to clean up a shop, but as a small part of that job they have to manage a couple of other people. Calling that person an exempt employer, a manager, a supervisor and paying them a salary basis isn’t going to cut it. It’s not going to work.

You have to look at what they actually do. Are they actually performing functions that are managerial and supervisory as a core of their business? Are they given discretion in terms of what they can do within the business? Are they more like an employee who has to come in at a certain period of time and do their job and doesn’t have much discretion? And there are class actions all over the United States dealing with those kinds of issues, trying to decide, is this person really categorized correctly as an exempt or non-exempt employee?