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Importance Of Having Exempt Employees For Small Business Success

By Expert Author: Oren T Dorell

Hardworking employees are one of the important assets of every successful business. When it comes to small businesses, the role of such employees becomes even more crucial due to limited resources.

Employees in critical roles like executive, administrative and professional are important for small business success because people in those roles perform crucial role in the organization such as managing the business, framing and executing management policies and performing non-manual tasks that require independent judgment and discretion.

For a small business to reach their goals as planned, they need employees in crucial roles to work hard at least during the initial years of the business, or during project delivery time. If employees in these roles are enrolled under regular employee, according to Fair Labor Standards Act (FLSA), they are entitled to minimum wage and overtime pay, which is one and half times the regular rate of pay. This kind of laws not only prevent the small businesses to discourage long working hours, but also make it difficult for them to achieve their business objectives.

Exempt Employee Act

To prevent such instances, you can make use of 'Exempt Employee Act': Under which FLSA provides exemption from both minimum wage and overtime pay for employees who are employed as bona fide executive, administrative, professional and outside sales roles. A few sections under the act also exempt certain employees with computer skills.

Eligibility for exempt employee status

Job title alone does not determine exempt status. For an employee to get qualified they should pass certain tests with respect to their job profile and salary according to Department's regulation. Though job profile varies from one job to other, a common rule is exempt employees should be paid on salary basis and the minimum salary should not be less than $455 per week.

Only for 'white collar' employees

According to FLSA, only 'white collar' employees who satisfy the job profile and salary tests become eligible for exemption. The exemptions do not apply to 'blue collar' workers who do manual labor whose work involves repetitive tasks with their hands, skill and energy, like that of employees in production, construction, maintenance fields and in occupations such as carpenters, mechanics, plumber, etc. These employees are entitled only for minimum wage and overtime pay.

The Act is also not applicable for employees in various public service departments like Police, Fire Fighters, Paramedics and other First Responders.

Benefits of having exempt employees

Exempt employees in the afore mentioned roles can enjoy a more flexible work environment than non-exempt employees, who typically finish their work in the scheduled shift.

FLSA prohibits the employer from requiring the exempt employees to "punch a clock" or work in a particular schedule, or make up the time lost because of absences. Therefore, whenever required, the employee can stretch extra hours, work on weekdays and holidays.

At the same time, the department also doesn't limit the work an employer can expect or require from an employee.

Knowledge-4-success.com is a website mainly dedicated to small businesses. It offers small business owners a wide range of insightful and informative articles covering various topics on business planning, books to read, self-development, technology, marketing and many more that could help small businesses survive and succeed in today's competitive world.

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