You have a startup business. Here’s some things you need to know about paying your employees correctly. Federal Wage Law requires you to pay your employees overtime if they work more
than 40 hours in any week. Like all rules, there are exceptions. And here the exceptions are called “exemptions”. There are many different types of exemptions.
Let’s focus on the three exemptions that will most likely affect your startup business. They are the Computer Professional Exemption,
the Administrative Exemption, and the Executive Exemption for Supervisors.
The Computer Professional Exemption applies to high level, sophisticated computer professionals. These are employees who are highly
skilled at computer systems analysis, programming, and software functions. These are not employees who repair or maintain computer hardware. The second type of exemption is the
Administrative Exemption. Computer employees can qualify for the
Administrative Exemption where their main job involves coordinating, scheduling, and
planning activities required to develop systems to solve problems. Problems
must be complex business, scientific, or engineering problems. Let’s not forget the Supervisors. They
can be exempt too under the Executive Exemption. Their main job must be management. They need to supervise at least two other employees and if they don’t hire and fire other employees, Their suggestions about others’ employment status must be given great weight. Remember, many of the exemptions have
minimum salary requirements too. And don’t get bogged down in the title of the job. It doesn’t matter what you call the employee; it matters what the employee is actually doing. The test for these exemptions can be very difficult to apply in practice, and many employers, despite their best efforts, simply mess it up. For that reason, overtime and classification claims are one of the most prevalent types of
employment lawsuits and even if you have insurance, many policies exclude classification and overtime claims. There are ways to lessen liability though. If you are not 100% certain of an exemption,
you should get legal advice in writing. If a lawyer concludes that a position is exempt, you can use that letter in a later lawsuit to prove your good faith. A good faith showing would defeat an employee’s right to double damages and the employee would only be
able to recover wages for the last two years instead of the last three years. Don’t worry if the letter ultimately
concludes that the employee is not exempt. That letter is privileged and will not
have to be produced in litigation. We have more resources available to you on our site. If you have any questions, give me a call.