Exempt or nonexempt employee? A pricey distinction for employers

It's crucial to know the difference when it comes to reimbursing staff members for working overtime.

By Julie A. Jacob, AMNews staff. Sept. 2, 2002.

A physician sometimes asks his salaried secretary to stay late to finish some work. She sues for overtime pay and wins, costing the doctor double the amount of overtime pay due, along with hefty attorney fees.

That's the sort of financially painful situation that doctors can find themselves in if they don't know if their employees are exempt or nonexempt from overtime pay regulations.

There is an "epidemic" of nonexempt employees suing employers who did not compensate them for overtime work, said Joseph Fleming, an attorney with Greenberg Traurig LLP, a Miami law firm that specializes in employment law.

"It is a slam dunk. You go in with the information and go out with the attorney fees," said Fleming. Employees who successfully sue are usually rewarded twice their overtime pay, along with attorney fees.

The distinction between exempt employees, who are not entitled to overtime pay, and nonexempt employees, who are, is more complicated than whether the employee receives a salary or hourly wage, said Fleming.

The distinction depends on job functions and responsibilities, he said. Depending on what an employee is required to do on the job, a nurse, a medical assistant or a billing clerk, could be either an exempt or nonexempt employee.

Generally, exempt employees include those who either manage people or use discretion and independent judgment in their job. But just because an employee receives a salary or has a degree doesn't mean that he or she is automatically an exempt employee. "You need to be very, very careful," Fleming said. [...]