Ask the Expert: Can Employees in Same Job Be Classified Differently?

Question: Can a company have multiple people in the same position, performing the same duties, and have some coded as non-exempt (based on salary) and some coded as exempt (because they meet the minimum requirement)?

Answer: Thank you for your excellent inquiry regarding having employees who are performing the same job duties be classified differently (exempt vs. non-exempt) based on whether each worker’s compensation meets the minimum required by FLSA.

For purposes of complying with the FLSA, this practice would be acceptable.

Recall that, in order to be classified as exempt, each employee must meet three tests or requirements – the salary basis test, the salary level test, and the duties test. In your case, you have employees who meet both the salary basis and duties tests, but some do meet the salary level test and some do not.

The fact that some workers do not meet all three tests need not affect the exempt/non-exempt status of comparable workers who do meet all three tests. In other words, you are not required to treat the higher-paid employees as non-exempt (foregoing an exemption that your organization qualifies for) solely because you have some employees performing the same functions for lower pay.

The DOL addressed a similar situation in a 2005 Opinion Letter, which you may be interested in for further guidance. In that letter the DOL noted that “having some employees within the same job classification who perform the same duties but who are paid on a different (hourly) basis does not affect the status of any other exempt employees paid on a salary basis. Exemptions under 29 C.F.R. Part 541 are not based upon a job title or job classification, but upon the salary and duties of each individual employee.”

For example, an organization may have some employees who wish to perform the same job function on a part-time basis. Even though the duties are the same, these part-time workers may not meet the salary level test or their available work hours may fluctuate enough that it is more practical to pay them on a non-salary basis.

Thus these employees would perform the same job as the full-time exempt workers, but would do so on a non-exempt basis. This practice would also be acceptable.

The one caveat to consider, here, is ensuring that there is a nondiscriminatory, business-related reason that employees are performing the same duties, but some are earning more than others. For example, this may simply be a matter of seniority – some employees may start out earning below the FLSA salary level requirement but, over time, receive pay increases to place them within the exempt salary level.

Other distinctions may include the workers’ experience or education or perhaps the size of the staff, service area, client list, etc. that the higher-paid employees oversee.

However, if the distinction between the roles appears to be founded on a discriminatory basis to the detriment of members of a protected class, then your organization could face liability under anti-discrimination laws.

Finally, keeping in mind that job titles are not dispositive in determining FLSA exempt/non-exempt status, it may still be beneficial to create different job titles/levels – one for the exempt level and one for the non-exempt level – just to avoid confusion. The distinction between these levels could then simply be based on the nondiscriminatory criteria that explain the difference in salary level.

For example, Analyst Level I (Non-Exempt) may be used for workers with fewer than 5 years of tenure. Analyst Level II (Exempt) may perform the exact same duties, but have 5 years of tenure with the organization or comparable outside experience.