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Exempt vs. Non-Exempt Employees
In the workplace, there are two classifications of employees - the exempt and the non-exempt. Knowing the difference can save your startup a lot of its precious capital – this is because your non-exempt workers must be paid overtime wages if they're on the job for more than 40 hours a week. Clear and specific governmental regulations exist specifying which of your workers are entitled to overtime pay (and under what conditions). Be aware of these rules and follow them assiduously.Employees are classified as either exempt or non-exempt. Exempt employees are not required to be paid overtime; whereas, non-exempt employees are required to be paid overtime. The default rule is an employee is non-exempt unless the tech company finds an exemption. The exemptions are executive, administrative or professional employees.
Executive Exemption. Any employee who:
- manages the enterprise in which he or she is employed or manages a department or subdivision thereof;
- directs the work of two or more employees;
- hires or fires other employees or whose recommendations lead to hiring or firings of employees or advancement of employees;
- exercises discretion and independent judgment;
- engages in exempt work; and
- earns a monthly salary equivalent at least two times the state’s minimum wage for full-time employment of 40 hours per week.
Administrative Exemption. Any employee who:
- performs office or non-manual work directly related to management policies or general business operations OR performs functions in the administration of a school system or educational establishment or institution, or of a department or subdivision thereof;
- exercises discretion and independent judgment;
- assists a proprietor in a bona fide executive or administrative capacity
- performs under only general supervision work along specialized or technical lines requiring special training experience, or knowledge;
- executes under only general supervision special assignments and tasks;
- engaged in exempt work; and
- earns a monthly salary not less than two times the state minimum wage for full-time employment of 40 hours per week.
Professional Exemption. Any employee who:
- is licensed or certified by the State of California and is primarily engaged in the practice of one of the following recognized professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting;
- is primarily engaged in an occupation commonly recognized as a learned or artistic profession;
- earns a monthly salary equivalent to no less than two times the state minimum wage for full-time employment of 40 hours per week.