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Exempt vs Non-exempt

Eddie Price's Profile

trying to create two new positions in the accounting department. One an inventory accountant (oversee 110 field inventories, recon perpetual to physical, and responsibilities for monthly close) and an AR/Collections staff to approve new accounts for Work boot programs, set credit limits, and pursue collections on late payments. both positions require accounting degree. HR is pushing that these be non-exempt, I think they meet the rules for exempt. Any insights would be appreciated

Answers

Jennifer Eversole
Title: Partner & Knowledge Enthusiast
Company: Management Stack, LLC
LinkedIn Profile
(Partner & Knowledge Enthusiast, Management Stack, LLC) |

Eddie,

Here is a link to an ADP publication outlining when employees can be considered exempt. I hope this helps.

https://www.adp.com/pdf/979_686_ct-03-173-0971.pdf

Eddie Price
Title: CFO
Company: Shoe Sensation
(CFO, Shoe Sensation) |

Jennifer, thanks for the quick reply, getting a lot of push back from head of HR. will read thru this after the board meeting this morning.

Derek Benson
Title: Controller
Company: Olameter Inc.
(Controller, Olameter Inc.) |

Eddie,

The DOL fact sheet might have a bit more detailed info for you. I believe you are claiming the exemption for admin employees. Refer to: http://www.dol.gov/whd/overtime/fs17c_administrative.pdf

You will be okay on the salary front (I'm hoping so if you're requiring a degree!) and on the duties criteria. It is the discretion and independent judgement criteria that you will have the most difficulty with. You should consider the job responsibilities again looking at the DOL definition of applying discretion & judgement. Normally staff for me don't qualify (such as a payroll clerk), but the supervisors and managers will (such as payroll manager).

Eddie Price
Title: CFO
Company: Shoe Sensation
(CFO, Shoe Sensation) |

derek
actually looking at 2 accounting staff, one for inventory and one for cash

Derek Benson
Title: Controller
Company: Olameter Inc.
(Controller, Olameter Inc.) |

Eddie, based on your quick description above, it seems that they are not just simple clerks who are working under an inventory & AR manager. Your inventory staff in particular looks to have to use discretion & judgement in their job since the processes seem relatively complex. The AR/Collections staff has to be examined in more detail. Are they able to come up with and implement their own collections procedures? Do they have any authority to make decisions on their own? Or are they simply just chasing down your AR? If it is the latter, I would categorize them as non-exempt.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I just heard they want to push the salary ceiling for overtime to people making under $51K.

Anonymous
(VP -Finance / Controller) |

I guess I would wonder why you really care to change their status unless you are trying to avoid paying them overtime. This is an HR area of expertise so let them decide. If you have to pay overtime so be it. In the end does it really matter?

Derek Benson
Title: Controller
Company: Olameter Inc.
(Controller, Olameter Inc.) |

This is likely the principal reason, however it is not bad to be organized and have these things straightened out before you run into a problem. It does matter if your employee is expecting to be paid time and a half for coming in on a Saturday and you were expecting to provide them with a floating day to take off.

(Agent, JKS Solutions, Inc.) |

Before you make your decision, please check with your State definitions. The State rules control exempt and non-exempt statuses. Here is a generalized website that has the rules that come into play when considering this.

http://www.thehrspecialist.com/article.aspx?articleid=5375

Jan Wilson
Title: President
Company: Vital Assets LLC
(President, Vital Assets LLC) |

There is a very good reason you are getting pushback from HR. You two should be working together on issues like this, especially where the matter is within the other's expertise. This is an important HR issue with significant potential for liability, legally, financially, and in time-waste, once your mis-categorization is identified by DOL, opening up a much larger can of worms. The exempt category of "Administrative" is of particular confusion in its critical definition of decisions regularly being made using "discretion and independent judgment". Will you be "caught"? Maybe not, but is it worth the risk when the fix is just to accept that these would most likely be considered non-exempt by DOL, who are after all, the real last word, not you or your management? Not only is the DOL, and your state employment agency if you have one, responsible for protecting the rights of employees in compensation, they have a monetary interest as well, in collecting appropriate employment taxes, such as those on overtime. As a long-time HR consultant, and occasional expert witness, believe me, exemption mis-categorization is my bread-and-butter, since it is a regulatory foot-in-the-door for government intervention on your practices.

Eddie Price
Title: CFO
Company: Shoe Sensation
(CFO, Shoe Sensation) |

decision was never one of avoiding overtime, it was being driven by recruiting, as we are using a recruiter for both positions as we are looking for a specific skill set. Candidates are not wanting to consider hourly status, even if they can make more in the classification.

Valerie, thanks for the link, had already reviewed with HR, but was good to see it come thru as a recommendation.

Jan - surprised at your post, never indicated I wanted to do anything but the right thing which is why I reached out to the group. Tone at the top is always take the high ground. Which is why we agreed with HR yesterday to classify as nonexempt and continue the search.

Wayne - thanks for the info.

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