Vision Payroll

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. Earlier posts discussed the definition of an administrative employee. The following are examples of specific jobs that generally either qualify or don’t qualify the employee under the administrative exemption:

• Insurance claims adjusters qualify whether they work for an insurance or other type company.
• Financial services employees who analyze information, advise customers, market, service or promote the products qualify, but not those whose primary duty is selling.
• Employees who lead a team of employees “assigned to complete major projects for the employer”, even those without direct supervisory authority should qualify.
• Executive assistant or administrative assistant to a business owner or senior executive will qualify if the assistant has been delegated authority over significant matters.
• Human resources mangers who “formulate, interpret or implement employment policies” do qualify. Personnel clerks who screen applicants for minimum acceptable standards as set by others generally do not qualify.
• Management consultants who propose changes in a business’s operation qualify.
• Purchasing agents with authority to make significant purchases qualify even if the agents need consultation for unusually large commitments.
• Inspectors “along standardized lines involving well-established techniques and procedures” and those doing other ordinary inspection work do not qualify.
• Examiners or graders do not qualify, even if the employee has progressed to a point that reference to written standards is unnecessary because of acquired knowledge.
• Comparison shoppers who report prices to a retail stores buyer do not qualify, but the buyer who evaluates the information to set the prices does qualify.
• Inspectors and investigators in the public sector, including those involved in “fire prevention or safety, building or construction, health or sanitation, environmental or soils specialists” among others do not qualify.

Note that merely giving someone a title does not qualify the employee as exempt unless the duties and responsibilities that the job encumbers are also designated. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

This week’s question comes from Jennifer, an office manager: A new employee gave me a Form W-4 claiming exemption from federal income tax withholding. Can I give him a paycheck without withholding federal income tax? Answer: An employee who gives you a valid Form W-4 claiming exemption from federal income tax withholding does not have to have federal income tax withheld from his check. An employee may claim exemption from federal withholding if the employee had no federal income tax liability last year and does not expect to have a liability this year. Being of a certain age, being a student, or getting a refund on a federal income tax return (Form 1040) does not necessarily entitle an employee to claim exempt status. Valid Forms W-4 generally expire on the first weekday after February 14 of the succeeding year. For example, 2008 Forms W-4 claiming exempt status will expire February 16, 2009. At that point, employers must either obtain an updated Form W-4 for the new year or withhold based on the last valid Form W-4 they have for that employee. If none be available, employers must withhold based on single and zero withholding allowances.

Employees who submit invalid Forms W-4 are not to be allowed exempt status. Invalid forms include forms developed by the employee, forms with the certification language deleted, forms with the word “exempt” on line 7 and a number on line 5 or an amount on line 6, and forms that the employee indicates in any way are false.

Exemption from federal withholding does not automatically entitle the employee to an exemption from Social Security, Medicare, or state withholding tax. There are limited exceptions to withholding of Social Security or Medicare tax that are unrelated to an employee’s exempt status. Also, state exempt status generally follows different rules and requirements and filing of a state withholding form claiming exempt status. Contact Vision Payroll if you have questions on an employee’s Form W-4.

Today and on the fifteenth of every month, Vision Payroll posts a new HRCast, a recording provided by our team of HR Pros. These recordings help you better manage your business and your most important asset, your employees. In prior months, topics covered included hiring tips, the difference between exempt and non-exempt employees, the independent contractor vs. the employee, and relationships in the workplace. These recordings run between five and ten minutes and provide a great overview of the topic. Search our HR site for more information on the topic or pose a question to our team of experts and receive your answer within one business day. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. An earlier post discussed that to qualify for the administrative exemption, an employee must “exercise…discretion and independent judgment” in significant matters. Discretion and independent judgment involve “the comparison and the evaluation of possible courses of conduct, and acting or making a decision after” considering various possibilities. Some factors are “whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business; whether the employee has authority to commit the employer in matters that have significant financial impact; whether the employee has authority to waive or deviate from established policies and procedures without prior approval; whether the employee has authority to negotiate and bind the company on significant matters; whether the employee provides consultation or expert advice to management; whether the employee is involved in planning long- or short-term business objectives; whether the employee investigates and resolves matters of significance on behalf of management; and whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances.” The regulations specifically state that other factors may also be considered in making the determination. Discretion and independent judgment generally require an employee to make decisions “free from immediate direction or supervision.” The decisions may, however, be reviewed by upper-level personnel or not followed at all. Neither means that the employee did not exercise discretion and independent judgment. The fact that several employees may perform similar work or work of the same level of importance is not necessarily enough to disqualify the work from requiring discretion and independent judgment. Types of work that do not require discretion and independent judgment “include clerical or secretarial work, recording or tabulating data, or performing other mechanical, repetitive, recurrent or routine work.” The fact that an employer may suffer “financial losses” if an employee fails to properly perform a job does not necessarily mean that an employee who performs that job exercises discretion and independent judgment. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. An earlier post discussed that to qualify for the administrative exemption, an employee’ s primary duty must be “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.” Therefore “working on a manufacturing production line or selling a product in a retail or service establishment” does not qualify as an exempt administrative function. Examples of work that does qualify include “work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; [and] legal and regulatory compliance.” The regulations specifically state that other duties not listed above may also be included in the duties of an administrative employee and that such duties may also be performed by employees who qualify under other FLSA exemptions. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The administrative exemption allows employees who qualify as “administrative employees” to be exempted from both minimum wage and overtime requirements. Only employees “employed in a bona fide administrative capacity” qualify for the exemption. Any employee who meets all the following tests shall be considered an “administrative employee” for this purpose: 1) The employee must receive a salary of at least $455 per week, not including board, lodging, or other facilities. 2) The employee’s primary duty must be “the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.” 3) The employee must “exercise…discretion and independent judgment” in significant matters. Future posts will provide further clarification of certain terms in the administrative exemption as well as provide other tests that may qualify an employee as an administrative employee. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the administrative exemption.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. The fact that employee may perform both exempt and non-exempt duties does not necessarily disqualify the employee from executive classification under the FLSA. The determining factor is generally whether the employee directs other non-exempt employees and remains “responsible for the success or failure of business operations” or is merely directed by another to perform the exempt function or performs it for a certain period. “An employee whose primary duty is ordinary production work or routine, recurrent or repetitive tasks cannot qualify for exemption as an executive.” Generally, the ultimate deciding factor, based on the facts and circumstances of each case, is whether or not the employee’s primary duty is management. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. One of the tests to be met is that an executive must be able to make “suggestions and recommendation [that] are given ‘particular weight.’” Among other factors to be considered are, “whether it is part of the employee’s job duties to make such suggestions and recommendations; the frequency with which such suggestions and recommendations are made or requested; and the frequency with which the employee’s suggestions and recommendations are relied upon.” The “suggestions and recommendations” should pertain to employees whom the executive manages. Occasional suggestions about co-workers are not sufficient to meet this standard. The “suggestions and recommendations” need not be the ultimate deciding factor or even the most important determinative factor to qualify as being given “particular weight.” State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. One of the tests to be met is that an executive must “customarily and regularly” direct the work of at least two other employees. The two or more employees test is an equivalency test. Four half-time employees are equal to two full-time employees. Supervision may be split among two or more employees, but each must supervise two or more full-time equivalents. A department with five non-exempt employees, for example, may not have more than two exempt supervisors under this test. Assistance in the actual manager’s absence is not sufficient to meet the requirements of this section. An employee’s work can only be credited to one supervisor; an employee who works eight hours can be credited four hours each to two different supervisors, but not eight hours to each supervisor. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.

Under the Fair Labor Standards Act (FLSA), employees must be paid a minimum hourly wage and an overtime premium of one and one-half times the regular rate of pay for hours worked in excess of forty per week. This is the one of a continuing series that discusses FLSA exemptions. The executive exemption allows employees who qualify as “executives” to be exempted from both minimum wage and overtime requirements. One of the tests to be met is that an executive must manage an enterprise or department or subdivision thereof. The department or subdivision must be permanent and continuing. The regulations explain that a “human resources department might have subdivisions for labor relations, pensions and other benefits, equal employment opportunity, and personnel management.” Enterprises with more than one establishment may consider each establishment a subdivision for this purpose. There is however, no physical presence test for a department or subdivision. Likewise, the fact that the employees that the executive manages may change from time-to-time is irrelevant. Neither the physical presence nor the static employee test is determinative; instead the facts and circumstances surrounding the employee’s management activities are what are critical to classifying the employee as an executive. State laws may provide rules that are more beneficial to the employee and must be followed. Contact Vision Payroll if you have questions about the executive exemption.