
What is an SDI Tax?
Gain knowledge of state disability insurance tax. Discover the different rates and types of SDI tax plans and how they can impact you.
Paying employees can be a complicated procedure. A company needs to comply with many different rules and regulations, like the Fair Labor Standards Act (FLSA), administered and enforced by the U.S. Department of Labor. FLSA protects employees against unfair compensation practices.
Employment regulations are diverse and have a wide range of coverage to keep both the employees and employers pleased. However, the federal minimum wage and employees’ rights to overtime compensation are the most important elements. Companies need to be aware of all the regulations to run a business. That is why determining a worker’s FLSA status holds such a great importance.
According to FLSA, there are two different kinds of employees: exempt and nonexempt. To comply with the FLSA specifications for determining a worker’s status, the companies must understand and differentiate between exempt and nonexempt employees.
Many aspects can allow for differentiation between these two. However, in simple terms, an exempt employee is an employee that receives a salary for the work that they do, and a nonexempt employee is one that’s paid by an hourly rate.
Let’s break down what other features differentiate these two.
To be labeled as exempt, the employee must meet three conditions:
Exempt employees are paid a salary rather than an hourly rate. Therefore, they are exempt as long as they are entitled to a monthly base payment more than the FLSA minimum level. This is regardless of the number of hours they work each week.
For example, to be exempt in 2020, employees had to earn a minimum of $684 per week or $35,568 per year. Employees earning less than this amount were are classified as nonexempt.
The exemption only applies to individuals who have professional jobs that demand a higher degree of experience and knowledge.
Exempt employees must meet the FLSA salary level.
Nonexempt employees are entitled to the federal minimum wage and overtime pay, which is estimated as one and a half times their hourly rate for each hour worked over the regular 40-hour workweek.
These are the regulations stated in the federal FLSA for nonexempt workers:
The rights of nonexempt employees are detailed in the FLSA.
There are also different types of exempt employees, including:
Employees with executive exemption must meet the following criteria:
To be eligible for the administrative exemption, employees must meet the following requirements:
Employees must meet the following requirements to have a professional exemption status:
Employees in this category must meet the exemption conditions and work in a computer-related function.
Employees who are exempt based on outside sales must meet the following requirements:
Who is covered by the FLSA? Nearly everyone.
Employees are protected if they work for a company with at least two employees, and has a “volume of sales or business done for at least $500,000” each year, or is a hospital, nursing home, school, or preschool, or government organization.
If this doesn’t apply, employees are nonetheless protected “if they work regularly in interstate commerce.” So, if a company interacts with people in other states, whether they call them, mail them products, or work in a building where items will be transported to them, they’re covered.
Domestic service workers, such as housekeepers or nannies, are frequently covered as well.
According to the FLSA overtime laws, certain jobs may be entirely excluded from coverage. There are two kinds of complete exclusion. The statute explicitly forbids some jobs.
For example, the FLSA overtime laws do not cover many agricultural laborers or employees of movie theaters. Another form of exclusion are the jobs controlled by different federal labor legislation.
As a general rule, the FLSA doesn’t apply if another federal labor statute regulates the job. For example, the Railway Labor Act protects most railroad workers; and the Motor Carriers Act governs truck drivers.
The FLSA, which was introduced in 1938 and has undergone multiple revisions since then, is one of the most important regulations for employers to know and understand.
It sets out a wide array of rules for dealing with employees’ and employers’ rights and responsibilities. Therefore, it makes it easy to know the limitations and keeps both sides informed not to overstep boundaries.
For more information on FLSA status, visit the FLSA home page.
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