Keeping up with the ever-changing regulations governing exempt workers can be a challenge. Improper exempt workers’ classification and non-compliance with regulations pertaining to exempt workers and non-exempt workers generate some of the largest back pay awards and fines ever recorded. Penalties and back wages are computed with the same formula for all companies–large or small. Exempt employee classification and compliance infractions can be devastating or ruinous to any employer.
As an exempt employee, your compensation is typically based on a fixed salary rather than hourly wages.
Although payroll rarely makes the decision on which employee is classified as exempt it is critical that they understand the regulations regarding how the determination should be made. It is even more critical that the payroll department understand and apply the strict rules for paying employees who are classified as exempt. The department must ensure that all exempt employees are paid on a salary basis and that no exempt employee’s wages are docked improperly. It is crucial to remember the penalties for errors apply to both the classification of the worker and the actual payment of salaries when it comes to exempt employees. More importantly, the penalties are applied to all workers in the same job classification under the same manager when a mistake is made in paying an exempt employee not just the one worker who was paid incorrectly.
