Exempt vs. Non-Exempt Employment in NY
It’s been a very long week. After five grueling twelve-hour days, you are ready for some rest.
You are also ready for that overtime payment.
However, when payday comes, you notice that you were paid at your regular rate for overtime hours.
You think that this has to be a mistake, so you ask your employer.
If your employer tells you that it was not a mistake, and that you were paid regular time because you are exempt from being paid overtime—this may raise more questions than it answers.
You might wonder if your boss is correct. Is this possible? Is it legal?
It is true that some employees are exempt from an employer’s duty to pay overtime. Knowing whether or not you are exempt is a question that requires an assessment of the facts of your employment status.
Certain employees are considered exempt from certain wage and hour regulations, but sometimes, employers will misclassify employees to try to cheat the system. And sometimes, they make innocent mistakes.
This guide will break down some of the basics of these exemptions, but it is not a substitute for legal advice from an experienced employment lawyer.
What Is an Exempt Employee in New York?
Under the Fair Labor Standards Act (FLSA), certain employees are exempt from federal minimum wage and overtime regulations.
New York also has its own regulations regarding minimum wage and overtime, though there are many similarities. There are a number of exemptions to the FLSA, but we will focus on a few of the more common ones.
Executive employees are those responsible for running an organization. Executives are not just managers; they are high-level decision-makers.
To qualify as an executive employee, you would need to fulfill the following requirements:
- You are responsible for managing the business or a division of the business;
- Your duties include overseeing and managing at least two other full-time employees;
- You are paid a salary (as opposed to an hourly wage); and
- You are responsible for hiring and firing decisions.
Executive employee status would probably extend to CEOs, department heads, CFOs, or other high-level executive positions.
Administrative employees are involved in the management or general business of the company. These are often employees who are crucial to business operations.
- You are paid a salary;
- You are responsible for the management or general business operations; and
- Your primary duties include the discretion and independent judgment to make significant decisions for the company.
Administrative employees could include senior managers and higher-level HR employees.
Professional employees have the knowledge and experience to provide a unique skill set to the business. There are two types of professionals under the FLSA: learned professionals and creative professionals.
Learned professionals are those who:
- Are paid a salary;
- Have primary duties that are intellectual in nature and use their advanced knowledge in a particular field; and
- Have advanced knowledge in a field of science or learning that was acquired through an extended course of study.
Healthcare professionals such as doctors, nurses, engineers, and accountants might be considered learned professionals under the FLSA.
Creative professionals are those who:
- Are paid a salary; and
- Whose duties involve creativity, ingenuity, or imagination in a recognized artistic or creative field.
Graphic designers, chefs, and composers would likely be considered creative professionals.
Highly Compensated Employees
This can be a bit of a catchall for highly paid employees who do not necessarily meet all the criteria of one of the other categories.
Highly compensated employees are those who:
- Make over six figures in annual salary;
- Perform office or non-manual work; and
- Whose duties include at least one of the duties of the above executive, administrative, or professional exemptions.
Highly compensated people include a fairly broad range of employees.
The above categories make up the core areas of exempt employees, but there are other exemptions as well. Some additional categories of exempt employees include:
- Outside salespersons;
- Certain government employees;
- Taxicab drivers;
- Religious positions; and
- Volunteers and apprentices.
These exemptions may be broad, but they are not all-encompassing. Many employees are not-exempt under the FLSA or New York regulations.
Why It Matters
Both the FLSA and New York have regulations that may entitle you to minimum wage and overtime pay.
When an employer misclassifies a non-exempt employee in New York as being exempt, they may be depriving that employee of their right to fair pay. Misclassification could be costing you thousands of dollars in unpaid wages.
How We Can Help
If you’re not sure if you’re an exempt or non-exempt employee in New York, we want to talk to you.
Exemptions can be tough to determine, and the definition can sometimes vary based on court cases and administrative opinions.