Exempt vs. Non-Exempt Employee Status & Audits
Our experts develop customized measurement tools to obtain scientifically sound, reliable, and valid data.
Complex issues. Valuable insights.
BRG Labor and Employment experts have gained valuable insights into the complex issues associated with the exempt versus non-exempt status of employees. The results of our work have been used to design self-audits and other measurement tools to monitor and improve compliance efforts.
Our experts develop customized measurement tools to obtain scientifically sound, reliable, and valid data. We ensure the reliability and validity of our measurement tools through an extensive and detailed development process. Our job analyses provide in‐depth, specific information about how job incumbents actually spend their time at work. The results of our studies address key issues regarding the appropriate classification of employees as exempt versus non-exempt, compliance with overtime pay and meal and rest break policy and law, tip‐pooling, and the occurrence of off-the-clock work, including compensation requirements for industries that have donning and doffing practices.
Exempt Status Evaluation
Legal requirements for designating the correct classification of a job have several components and can differ by position, exemption, and location. Our experts focus on the percentage of time spent on specific tasks, different categories of tasks, and the level of discretion and independent judgment exercised on the job. Our professionals measure the amount of time spent on “exempt” versus “non‐exempt” work when evaluating the classification of a job. They also measure aspects of how incumbents spend their time, such as the proportion of time spent on managerial tasks, decision-making authority, and the level of control the incumbent has over the company’s business operations.
Primary research methods such as survey questionnaires, interview protocols, and especially observational studies are useful in determining exempt versus non-exempt classification of employees. For observational studies, BRG experts conduct repeat direct observations using modern application (“app”) technology and videotape technology, supplemented by semi-structured interviews and surveys, as appropriate. After they complete these studies, our experts often advise clients about maintaining compliance with employment regulations and developing customized measurement tools that can be used internally to ensure accurate classification of employees.
BRG experts offer guidance to organizations regarding wage and hour compliance, meal and rest break compliance, and human resource management strategy. These experts are knowledgeable about the challenges associated with job design, organizational structure, and work processes that make monitoring and enforcing performance expectations and legal compliance difficult. Our experts provide advice on how a company can address the compliance requirements of relevant state and federal laws.
Job design may lead to inherent conflicts between compliance with company and legal requirements and “getting the job done.” These conflicts can cause inefficiency and confusion and may lead to potential legal violations. Therefore, it is important that jobs be designed properly to meet company expectations regarding performance and to address legal compliance obligations. Our experts work with clients to address changes in the design of jobs that may be required in light of these challenges.
Organizational Structure and Work Processes
For employees to perform their jobs successfully in a manner consistent with the requirements of employment laws, the client’s organizational structure and work processes must support and reinforce compliance. This organizational support occurs on multiple levels. At the employee level, two key levers for compliance are performance management and training. At the establishment, store, or facility level, work processes must be established to maximize efficiency and comply with relevant laws. These organizational systems must reinforce desired behaviors and create disincentives and negative consequences for non‐compliance at all levels.
Our experts advise clients on incorporating compliance measurements into their performance management and training systems. Using BRG job analysis tools, our experts study establishment-, store-, and facility-level operations to understand how work is executed. They also evaluate how these work processes relate to employees’ ability to maintain compliance and identify areas for improvement.
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FLSA Exemption Update: Focus on the Duties Test
The Conference Board Labor and Employment Law Council
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May 5, 2017
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