Catalog of Sample Policies for Pennsylvania's Conservation Districts

Exempt, Non-exempt (Reference 2)
(Personnel Management Systems, Inc., edited)

Although the laws giving rise to the terms "exempt" and "non-exempt" are quite involved, this overview may help answer a few of your questions. Are employees exempt because they are highly paid? Are positions with management titles automatically exempt regardless of actual job duties? Should we reward our employees by making them exempt? Why do we need timecards? What does exempt mean?

FLSA and Similar State Laws
The 1938 Congress passed the Fair Labor Standards Act ("FLSA") to, among other things, establish a minimum wage and to encourage limits on weekly hours of work by requiring payment of an overtime premium. Subsequently, many states passed similar wage laws, which may be more beneficial to employees.

Exempt or Non-Exempt
The provisions of the FLSA or similar state laws apply to most employees. This non-exempt status requires employers to do the following:

• Pay the employee overtime pay at the rate of 1 ½ times the employee's regular rate of pay for all hours worked over 40 in a workweek.
• Maintain and retain specific payroll records, including records that detail the number of hours worked.
• Provide breaks and meal periods.
• Pay minimum wage.

In some limited situations, an employee may be exempt from state and federal minimum wage and overtime requirements. Employees are exempt because of the nature of their job and the degree of discretion and responsibility required to perform their job. The major exemption categories are known as white-collar exemptions and are designated as Executive, Administrative, Professional, and Outside Sales. Under federal law, and in some states, there is an additional exemption for Highly-Skilled Computer Professionals.

In general, an employee is exempt if he or she performs work that is of an exempt quality (e.g. management or non-manual work related to management policies, exercising independent judgment), performs a sufficient quantity of exempt type work on a daily basis, and earns an appropriate type and amount of compensation (generally, paid on a salary basis). Each exemption category has detailed requirements that must be met and the requirements vary between state and federal laws.

Because there are specific requirements for each exempt category, employers should assume
that all employees are non-exempt until a complete analysis clearly indicates otherwise.