Do you have a lot of medical bills that you pay on each month? Could those medical bills be deducted from your tax bill this year? I was helping my mother take care of all of her finances after my dad passed away. I didn't realize how many bills she had coming in each month for medical treatments that my dad had undergone months, even a year earlier. I started doing some research about medical bills and tax deductions. If you have medical bills, take a minute to read through this blog to gain some knowledge that can help you decide what you can do when tax time comes around.
It is the business owner's responsibility to make sure that all your employees are properly classified and paid. As a small business owner, there are no legal department or HR department to make sure that you are doing everything right regarding payroll; it is your responsibility to be educated about all payroll related issues.
What Exempt Vs. Nonexempt Refers To
When people talk about exempt and non-exempt employees, they are referring to the Fair Labor Standards Act (FLSA). The FLSA is short-hand for the federal laws which regulate and protect worker's pay in the United States. The FLSA was designed to make sure people are paid fair wages for overtime work and establishes the federal minimum wage for all industries.
The FLSA also provides other protections as well. The FLSA is where you will find the federal rules regarding child labor, as well as the federal rules regarding the equal pay act.
When people talk about exempt versus nonexempt employees, they are talking about the distinction the FLSA makes between different types of employees which determines who has to be paid overtime.
According to the FLSA, all nonexempt employees have to be paid at least time and a half for any hours they work over 40 hours a week. For example, if a worker is paid $10 an hour, time and a half would be at least $15 dollars an hour. You can pay a worker more than time and a half, but not less than time and a half for hourly work.
What Makes An Employee Exempt?
Not all employees have to be paid overtime. The basic criteria for an exempt employee is someone who is paid on a salary basis instead of an hourly basis. That is not the only requirement though.
An employee has to have high-level responsibilities. You can't just put the assistant janitor on a salary schedule in order to avoid paying overtime. An employee must meet specific job-duty categories. There are executive, administrative, and professional work responsibilities one must have in order to qualify as an exempt employee. You need to go over the job duties for any employee you think is exempt and make sure they meet the legal exemption criteria.
Finally, the salary you pay must be high enough. An employee's salary cannot fall below $23,660 per year. If it does fall below that amount, then that employee could not be considered exempt anymore. A salary that falls below the yearly limit would mean that your employee would still qualify for overtime.
What Makes An Employee Nonexempt?
Put basically, your nonexempt employees are anyone who is not an exempt employee. More basically though, a nonexempt employee is someone who you are paying on an hourly basis. Anyone who is working on an hourly basis can earn overtime pay when they clock in for more than forty hours within a week. It doesn't matter if they only worked one hour of overtime or twenty hours of overtime; all overtime hours qualify for overtime pay.
A week is defined as seven 24-hour periods in a row; a week doesn't have to start on a specific calendar day. For example, your workweek could be Wednesday – Tuesday each week, instead of Sunday - Saturday. You need to be clear what you define a week to be; you can't just change what you define a week to be just to avoid paying someone overtime. You must have a clearly defined workweek and pay period, and you have to pay who works overtime in a pay period the required federal minimum wage for overtime.
If you need help determining if your employees are exempt or non-exempt, work with a bookkeeping and payroll services. They can help you manage your payroll and ensure all your employees are properly paid. For more information, contact a company like The Callen Accounting Group, PLLC.
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