The Usual Suspects
One of my favorite movies from the 1990s was “The Usual Suspects”. Yes, I know that Kevin Spacey is cancelled, but I can separate art from artist. And yes, I know that I am completely dating myself😊 All that aside one of the best all-time lines in cinema came from this now-cancelled film.
“The greatest trick the devil ever pulled was convincing the world he did not exist.”
What does Keyser Soze possibly have to do with HR?
Flash forward 20 years later…. I was presenting our organization’s compensation structure at an all-staff meeting. Several smart and inquisitive people had the same question for the HR Team. “How come I am not exempt? Am I not considered important enough?” I calmly explained that the Department of Labor/FLSA makes the rules for deciding which job duties and roles are exempt and non-exempt and that it was not me or the organization making that assessment about them personally or what we thought of their position. After the meeting, a dear colleague of mine said it best.
“The greatest trick ever played was convincing workers to want to be exempt employees.”
I could not agree more because I fell for the trick.
Fresh-faced out of college in my first job I recall envying the exempt level employees and vowing that I would join that club one day. I resented logging in my lunch breaks. Nothing made me feel more at the bottom of the corporate totem pole than turning in my bi-weekly timesheet to my supervisor (think TPS reports from “Office Space”). What I did not notice at the time was that while the exempt-level attorneys all around me were toiling to make their billable hour requirements, I was earning almost double my base salary on overtime as a legal assistant and making nearly as much as the entry level attorneys coming in!
A few years later, I became an exempt employee and gave myself an invisible hi-five, thinking I reached some unspoken professional milestone. As I climbed a little further up the ladder, I found myself wistfully wishing to be a non-exempt employee again. The unhealthy structure of the American workplace had convinced me that working more hours for no more than base compensation was/is a good thing!
As I grew in my HR knowledge, I realized just how wrong the exempt/non-exempt label was being applied at the various places I had worked early in my career. Exempt labeling by employers is not malicious or intentional 95% of the time. It is simply lack of knowledge of the complicated rules.
I should have been a non-exempt employee for a lot longer in my career and with my zeal to be part of the exempt clique, I cheated myself out of a lot of compensation that I legally earned. Thankfully, there were state and federal laws for the 25-year-old version of myself, protecting me from my own worst enemy – my ego.
'The federal Department of Labor provides extremely strict guidelines for exempt employees (not verbatim). There are many types of exemptions not listed but these are the 5 most common. Those working as first responders or under a collective bargaining agreement (CBAs) have different rules. All the bullets under each exemption must be met to qualify.
Executive Exemption – Think CEOs and other chief and director level positions
o Minimum weekly wages of not less than $684/week, *
o Primary duty is managing an enterprise or a recognized subdivision
o Directing the work of at least 2 or more full-time employees or their equivalent; and
o Authority to hire/fire employees and make recommendations about hiring, firing, advancement, promotion, or other employee change of status
Administrative Exemption – Think Operations Manager or Business Analyst
o Minimum weekly wages of not less than $684/week, *
o Primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or its customers.
o Able to exercise discretion and independent judgment on significant business matters
Professional Exemption (2 types)– Think Doctors, Educators, Graphics Designer
Learned Professionals
o Minimum weekly wages of not less than $684/week, *
o Primary duty must be work requiring advanced knowledge, predominantly intellectual in character and consistent discretion and independent judgment
o Advanced knowledge must be in a field of science or learning; and
o Customarily acquired through a prolonged course of intellectual instruction
Creative Professionals
o Minimum weekly wages of not less than $684/week, *
o Primary duty must be work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor
Computer Employee Exemption - Think all of the main characters in Office Space
o Minimum weekly wages of not less than $684/week, ± or if hourly not less than $27.63/hour
o Must be a computer systems analyst, programmer, software engineer or similarly skilled workers in the computer field with a longer list of 4 specific domains of work performed
Outside Sales Exemption- Think of the salesman hawking billboard space on your stop and go commutes
o Primary duty must be making sales or obtaining orders or contracts for services or use of facilities for which consideration will be paid by client & customer; and
o Customarily and regularly engaged away from the employer’s place(s) of business
The complicated exempt rules, coupled with the desire to acknowledge the contributions of a high performer, put many organizations at risk. Let Akamai help you navigate these complicated employee classifications.
Thanks for reading!
*These 2021 base wages for exempt employees in California is $1,040 weekly/$54,080 for companies with 25 employees or less. The 2021 base wages for exempt employees in California is $1,120 weekly/$58,240 annually for employers with 26 or more employees. ±The weekly base salary for computer professionals in California is $1,902.07 weekly/$98,907.70.