We are a staffing company that employs W-2 contractors. We are trying to determine exempt vs. nonexempt status for an employee. The job is a Senior Systems Engineer. Utilizing an FLSA checklist, he meets the criteria for an exempt employee. However, he is not a salaried employee. Does the fact that he is paid hourly automatically place him in the non-exempt category?
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Thank you for your inquiry regarding exempt vs. nonexempt status under the FLSA.
The federal Fair Labor Standards Act exempts broad categories of “white-collar” jobs from its minimum wage and overtime requirements if those workers meet certain requirements set by the law. Depending upon the particular white-collar exemption (executive, administrative, professional, etc.) sought, these requirements include an individual analysis of the particular duties the workers perform and how much of their work time is spent performing those duties.
Additionally, the white-collar exemptions also generally require work to be paid on a salaried basis. (There are limited exceptions for work that is compensated on a fee basis).
Therefore, if the exemption you are seeking for this particular employee is one of the white collar exemptions then, yes, employees who are paid hourly typically will not qualify.
However, though they are the most commonly sought and frequently referenced, the white collar exemptions are not the only exemptions available under the FLSA. For example, there is also an exemption known as the “computer employee exemption” that covers certain highly-skilled computer professionals such as systems analysts, programmers, and software engineers.
This particular exemption does allow hourly compensation as long as the employee is paid at a rate of at least $27.63 per hour.
For more information on the duties tests for this particular exemption (in order to determine whether this employee’s role may qualify), you may find this DOL Fact Sheet helpful. Additional information on all exemptions, including the computer employee exemption, is also available on HR.BLR.com.