Exempt vs. Non-Exempt Employees: Learning the Differences | Wrapbook

Exempt vs. Non-Exempt Employees: Learning the Differences

May 8, 2020

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At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.

Last Updated: May 8, 2020

What is an exempt vs. non-exempt employee in New York State?

Like the laws set forth by the federal government and California, the designation of an exempt vs. non-exempt employee in New York depends on the nature of the work they perform.

If someone works in the administrative, executive, or computer fields, they’re exempt. In addition, New York law states that if an employee makes a salary of $107,432 or more a year, and they work in the administrative, professional or managerial fields, they’re exempt, too.

However, $107,432 is just one number to keep in mind. Another is $1,200 per week. That’s because $1,124.20 per week is the minimum an employee must make to potentially be considered exempt. That adds up to $58,458.40 a year. So yes, even those making just over half of $107,432 can still be exempt from getting overtime pay.

Note that these rates are for New York State – excluding New York City and Nassau, Suffolk, and Westchester counties. Those have different rates.

What about NYC, Nassau, Suffolk, and Westchester?

When it comes to an exempt vs. non-exempt employee in New York, an important question to ask yourself is where you’re hiring in New York State.

Where exactly the employee is performing the work determines exempt vs. non-exempt position meaning in New York.

For employers hiring employees with 11 or more employees in New York City, the salary threshold is $1,200 per week or $62,400 per year. For Nassau, Suffolk, and Westchester counties, the threshold is the same as NYC regardless of the size of the employer. If an employee is non-exempt and works in New York City, the minimum wage they are owed is $16 an hour. If they’re non-exempt and work in Westchester county or Long Island, it’s also $16 an hour. They work somewhere else in the state? Then it’s $15 an hour.

Does the film industry make distinctions for exempt vs. non-exempt employees?

Especially for producers of film, television shows, commercials, and all other entertainment-related projects, it’s key to be aware of what makes an employee exempt or non-exempt. Why the spotlight on producers? Because in addition to the many other hats that those in this position wear, being compliant for all exempt and non-exempt laws falls on their shoulders as well according to the Department of Labor. Just as with positions in other fields, job title alone does not determine exempt or non-exempt status in the film industry.

That being said, the following positions may be considered exempt under the right circumstances:

In looking over the above list, there’s one commonality—and it’s not working in an office! Rather, it’s that to be a film editor, still photographer or any other job indicated above, it takes a specific skill set gained through specialized training. In addition, many of these roles do exercise independent judgment or run departments. Hence, exempt status. However, there might be times you'll pay them as non-exempt if a union or guild stipulates they get paid in such a manner. Those responsible for determining the classification of exempt vs. non-exempt employees must adhere to both federal and state laws. We’ve discussed the general stipulations of California and New York, two states known for the high number of projects produced there; however, should a producer decide to shoot on-location elsewhere, those state laws must be adhered to instead.

What’s a quick and easy exempt and non-exempt test?

What we’ve discussed so far encompasses quite a bit of information. But, to remember the differences between exempt vs. non-exempt employees, let's go back to the basics.

What's an exempt employee?

Commit to memory these two considerations: pay and position. If the employee in question is getting paid at least $684 per week and they work in the administrative, computer, executive, outside sales or professional fields, odds are they’re an exempt employee.

Not all employees wear ties, but those that do may be exempt employees.

If it’s still not entirely clear how to determine exempt vs. non-exempt employees, especially in terms of job category, consider whether or not any formal education or specialized training was necessary for it. It may also help to note whether or not an employee receives high compensation.

What's a non-exempt employee?

Though many non-exempt employees can make far more than $684 per week, ask yourself, are they also part of the administrative, computer, executive, outside sales or professional fields? Perhaps instead they’re a copywriter, graphic designer or social media expert. In such cases, there’s a good chance they’re in a non-exempt position.

But don’t forget the state laws for exempt vs. non-exempt employees!

Crew members on set are often non-exempt employees, but that isn't always the case.

That’s a tipping point for many employers. However, being compliant with both federal and state laws doesn’t have to be complicated; many states have their department of labor stipulations detailed in simple terms to help those in hiring positions to determine exempt vs. non-exempt employees. Reach out to your state’s department of labor for further clarification.

Why does exempt vs. non-exempt status matter to employers?

As discussed, knowing whether your employees are exempt or non-exempt can be the difference between staying compliant and getting slapped with fines from the government. A failure to classify your employees correctly can result in an expensive payroll mistake.

Many employers are understandably interested in how exempt vs. non-exempt employees can impact their financial bottom-line. As such, here’s one more defining factor of those in exempt positions: they do not qualify for overtime pay according to the Fair Labor Standards Act.

Here’s another way of looking at it:

Say an exempt employee is paid a $50,000 yearly salary. Whether their job requires 40 hours or 65 hours on the job in a given week, that $50,000 stays the same. If they go over the standard weekly number of work hours, they do not receive any additional pay. As a result, if we circle back to an employer’s bottom-line, correctly determining exempt or non-exempt status could mean a payroll difference of hundreds if not thousands of dollars.

What does non-exempt from overtime mean in more concrete numbers? Well, according to the Fair Labor Standards Act, non-exempt employee overtime equates to one-and-a-half times the pay per hour for each hour over 40 worked in a given week. So for a person who normally earns $15 per hour, they must be paid $22.50 per hour of overtime. It's helpful to reach out to professionals to ensure all is well before payment goes through.

Wrapping up

Understanding the rules about exempt and non-exempt employees is critical to staying compliant. An employer of record payroll service can help you figure out the distinctions for your employees when you sign up. Keep up to date with labor regulations by checking out posts like our producer’s guide to new employment laws in California or our deep dive into paycheck laws by state.

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On every employee job listing, you’ll notice that some positions are listed as “exempt” while others are listed as “non-exempt.” The difference between exempt vs. non-exempt employees is fairly straightforward: exempt employees are exempt from overtime pay.

As a job seeker, understanding the difference will help you determine how and how much you’ll get paid. But for an employer, accurately classifying employees as exempt or non-exempt carries a greater burden. Not only can misclassification result in heavy fines, but without a firm grasp on the distinctions, you can’t accurately gauge how much payroll will cost. Even with decades of business experience under their belt, hirers can sometimes get tripped up on the finer details of what makes an employee exempt or non-exempt.