It is strongly recommended that employers clarify the definitions of employment classifications so that employees understand their employment status and benefit eligibility. These classifications do not guarantee employment for any specified period of time. Accordingly, the right to terminate the employment relationship at will at any time is retained by both the employee and the employer.
According to the Fair Labor Standards Act (FLSA) each employee is designated as either exempt or nonexempt from federal and state wage and hour laws. Nonexempt employees are entitled to overtime pay under the specific provisions of federal and state laws. Exempt employees are excluded from specific provisions of federal and state wage and hour laws and are generally paid (there are a few exceptions) on a salary basis that does not vary from week to week based upon the quality or quantity of work performed. In other words, exempt employees are paid “to get the job done.” Thus, an exempt employee’s pay will not be reduced in any fashion for partial day absences, except when permitted by law, such as unpaid intermittent Family Medical Leave Act (FMLA) leave. Any deductions from an exempt employee’s pay must be in compliance with acceptable parameters for such deductions.
For example, the following types of deductions are permissible with regard to exempt employees’ pay:
- No work is performed in a workweek;
- Absences of one or more full days for personal reasons other than sickness or disability if all accrued sick and vacation time has been exhausted (deducted in full day increments only);
- Absence from work for one or more full days due to sickness or disability (including workers’ compensation) if deductions made under the sick or vacation plan, or any other policy or practice of providing wage replacement benefits for those types of absences.
- Fees received by the employee for jury or witness duty or military leave may be applied to offset the pay otherwise due to the employee for the week;
- Penalties imposed by infractions of safety rules of major significance;
- Unpaid disciplinary suspensions of one or more full days in accordance with the company’s disciplinary policy;
- Deductions for the first and last week of employment, when only part of the week is worked by the employee; and
- Deductions for unpaid leave taken in accordance with an approved absence under the Family and Medical Leave Act (FMLA).
In addition to the above categories, each employee should belong to one other employment category:
- Regular full-time employees are those who are not in a temporary or introductory status and who are regularly scheduled to work generally at a minimum of 37 ½ to 40 hours per week. Full-time employees receive all legally mandated benefits such as Social Security and workers’ compensation.
- Part-time employees are those who are not assigned to a temporary or introductory status and who are regularly scheduled to work less than the 37 ½ to 40 hours per week. They do receive all legally mandated benefits such as Social Security and workers’ compensation insurance.
- Introductory employees are those whose performance is being evaluated to determine whether further employment in a specific position or with the company is appropriate. Employees who satisfactorily complete the introductory period, generally 30, 60 or 90 days, may be notified of their new employment classification. They do receive all legally mandated benefits such as Social Security and workers’ compensation insurance during their introductory period.
- Temporary or seasonal employees are those who are hired as interim replacements, to temporarily supplement the work force, or to assist in the completion of a specific project. Employment assignments in this category are of a limited duration. Employment beyond any initially stated period does not in any way imply a change in employment status. Temporary employees retain that status unless and until notified of a change. Temporary employees receive all legally mandated benefits Social Security and workers’ compensation insurance.
So, how are your employees classified? Do you understand the difference between exempt and nonexempt? Are you taking the permissible deductions from an exempt employees pay? If you are not sure and would like additional consultation, please contact New Focus HR.
Written By: Kristen Shingleton, M.B.A., CCP
President, New Focus HR LLC