Classifying Employees      

Classifying your employees as either exempt or non-exempt is neither exact nor easy. The decision cannot be made arbitrarily, nor should it be made based solely on the job title or the way the employee is paid, i.e., hourly or salaried.

Instead, the determination must be made based on job duties associated with the position, assuming the employee is paid on a salaried basis. An up-to-date job description is your best starting point!


An exempt employee is excluded from the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA). A non-exempt employee is one who must be paid at least minimum wage for all hours worked and overtime pay at the rate of time and one-half their regular rate for all hours worked over 40 per week. State laws may be more stringent.

A joint return generally offers the lowest tax bracket, but each spouse is then liable for the other's tax liability. 


Generally, non-exempt employees' work is routine with set standards and rules. The position generally does not require independent judgment. Typical examples of non-exempt positions include: bank teller, bookkeeper, secretary, and shipping/receiving clerk.

Generally, exempt employees exercise independent discretion in their positions and do not spend more than 20 percent of each workweek performing duties that are not related to their exempt duties.

The FLSA offers two independent tests which may be applied to determine if a position meets the executive, administrative, or professional exemptions -- the Long Test and the Short Test. If the duties of the position meet the requirements of either test, the employee is considered exempt from the minimum wage and overtime standards of the FLSA.

Finally, when using your job description to determine exempt or non-exempt status, be aware of state wage laws that may be more beneficial to the employee. An employee must be exempt under both state and federal law to avoid paying overtime.

The following identifies the requirements of the "Short Test" or "Streamlined Test" for exemption of certain types of employees:


Short test for high salaried employees:

  • salary not less than $455/week (exclusive of board, lodging, or other facilities)

  • primary duty is managing an enterprise, department, or subdivision

  • customarily directs work of two or more employees

  • has some responsibility for hiring, firing and/or advancement of employees


Short test for high salaried employees:

  • salary not less than $455/week; and

  • primary duty is performing office or non-manual work directly related to management policies or general business operations of employer or its customers, administrative work in the academic field, or work relating to academic instruction; and

  • exercises discretion and independent judgment in performance of work


Short test for high salaried employees:

  • salary not less than $455/week; and

  • primary duty is performing work that: a) requires advanced knowledge in a field of science or learning; or b) is original and creative in a field of artistic endeavor; or c) involves imparting knowledge as a certified or recognized teacher.

For a more detailed discussion of the requirements or more classes of specialized employees, please visit the website for the Department of Labor.