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Retaliation Definition – Incidents and Outcomes

Dictionary definition of word retaliation, selective focus.

Understanding the retaliation definition can help top management in a company avoid violations of this nature. Human resources managers, supervisors, and other staff need to be aware of the specifics of workplace retaliation so that this doesn’t become a problem in the office.

When employees report an incident to the Equal Employment Opportunity Commission (EEOC) or are involved in an investigation with them, they cannot be subject to any forms of workplace retaliation. Everyone in the company should know the retaliation definition to help reduce misunderstandings on the topic. Additionally, preventative measures can be put in place to avoid these issues.

What Is Retaliation in the Workplace?

You may be wondering, what does retaliation mean? This is a term that is specific to workplace retaliation. It consists of a manager or other employer retaliating against another employee because of their involvement in a “protected action.”

What is a protected action? Of course, not everything is protected. Suppose an employee is underperforming or has done something against company policy. In that case, a manager has a right to act, possibly demoting or disciplining the employee. If the employee files a complaint about this, their action would not be protected. However, if the employee engages in a protected action, such as reporting discrimination or sexual harassment, and the employer retaliates against them, that is illegal.

A protected action involves an employee reporting any wrongdoing to the Equal Employment Opportunity Commission (EEOC) or upper management. The federal anti-discrimination laws enforced by this entity prohibit retaliation.

What Actions Are Protected From Retaliation in the Workplace?

Some of the specific actions an employee may take that are protected from retaliation include:

• Filing a discrimination charge based on any protected category, such as race, color, religion, sex (including gender identity, sexual orientation, and pregnancy), national origin, age (40 or older), disability, or genetic information

• Filing a harassment charge based on a protected category, as mentioned above

• Complaining to the employer or other entity about discrimination or harassment

• Testifying in an investigation or lawsuit related to employment discrimination

• Reporting sexual harassment

• Asking for disability accommodations

• Reporting being asked to participate in discriminating against other coworkers

• Reporting unsafe working conditions or OSHA violations

Workplace retaliation laws also apply to the Americans with Disabilities Act (ADA) and the Equal Pay Act (EPA). So, any employee that reports on violations in these areas is protected from retaliation, too.

What Actions Are Retaliation?

Actions that fall into the category of retaliation in the workplace may be overt or subtle. Both are prohibited and may be grounds for disciplinary action.

Overt actions may include the following:

• Hindering the employee from participating in meetings or other events

• Keeping the employee from getting a raise

• Hindering the employee from a promotion

• Demoting the employee to a lower-paying position

• Reducing the number of hours that the employee receives for work

• Giving the employee a negative performance review

• Moving the person to an unfavorable department or location

• Making the employee’s work environment uncomfortable in some way

Subtle actions that may be classified as retaliatory are:

• Exclusion from activities that may be more personal in nature. For example, company picnics, employee birthday celebrations, coworker lunches, etc.

• Ignoring the employee in an obvious manner. For example, as soon as the person walks into the room, the manager walks out or talks in a whispered voice, making it obvious that they don’t want to include the other person.

• Extreme micromanagement of the employee.

• Creating a toxic environment for the employee.

• Being overly critical (especially if the manager was previously not this way).

Employees are always protected from retaliation whether their claim turns out to be true or not if they honestly believe it to be true. However, the employee must show a direct connection between the action and the retaliatory behavior.

Take Action to Prevent Retaliation in the Workplace

The best way to prevent retaliation in the workplace is to be proactive. Preventative steps by the management can keep the workplace operating smoothly and ensure leaders are following proper protocols. The following action steps help ensure that retaliation in the office doesn’t become an issue:

Put Guidelines in Place

Company leadership must have written policies that guide management, human resources, and employees about workplace retaliation. You can put these policies and rules in the company handbook, so everyone has easy access to them. Make sure they clarify the EEOC, anti-harassment, and anti-discrimination laws.

Hold Training Sessions

Once your written policy guidelines are in place, bring the staff together for a training session to review the information. Make sure they understand what retaliation in the workplace is, allowing employees to ask questions if they’re unsure about the information.

When new candidates are hired, make the training part of their onboarding experience.

Establish Procedures for Employees Who Have a Complaint

Employees should know what to do if they have experienced retaliation from someone in management. The company handbook and training should outline the steps they should take if they feel any of their rights have been violated. For example, they believe they were denied a promotion due to anti-discrimination laws, etc. Sometimes it can be easily established that discrimination was not the reason for being bypassed for promotion. When employees feel there is transparency and protocols for addressing these issues, you’ll have less stress.

Make Sure the Management Documents All Discipline Issues

Whenever an employee must be disciplined (which will happen from time to time), be sure the manager or supervisor in charge documents it thoroughly, providing the reasoning behind the discipline.

Have Regular Meetings with HR to Review Disciplinary Action


Before management writes someone up or disciplines them, it’s important to meet with human resources first to discuss the situation. Human resources can advise the supervisor about whether they are within their rights to take disciplinary action.

Also, everything will be documented with another party, showing they had a valid reason for the action, and they’re protected legally.

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FTE Meaning — Full-Time Equivalent

Colorful drawing showing "FTE" in a circle with lines and icon images saying "Full" "Time" "Equivalent"

Understanding more about full-time equivalent (FTE) will help your business with budgeting issues or meet certain legal requirements. You may need to determine how much you will spend on a project so you can have the right resources. In this case, knowing the FTE meaning will aid you as you prepare the budget. It will also keep you on track with the Affordable Care Act requirements for paying out benefits.

Understanding FTE

The FTE meaning is full-time equivalent but is also sometimes called whole-time equivalent. It represents the number of hours one full-time employee works in a week. It provides a unit of measurement by which management can project costs, time, and personnel for various tasks. It provides a standardized way to assess employee hours and measurements.

An FTE provides a metric for your business to calculate stats such as profits or expenses spent per employee. It also helps management keep on top of the hours they are paying for versus only how many employees they have working for them. Simply knowing the number of employees that you have doesn’t tell the whole story. Instead, knowing the FTE provides more information.

FTE Employee

As the acronym implies, an FTE employee is the equivalent of a full-time employee. What does that mean exactly? If your business considers 40 hours a full week of work, then an employee who works 40 hours would be equivalent to one FTE. If an employee only worked 20 hours in a full week, this employee would be equivalent to 0.5 FTE. This is how you would count an FTE for internal purposes, but when it involves compliance with other agencies, such as the Affordable Care Act (ACA), other guidelines must be followed (more on that below).

Why You May Need to Use FTE

There are various reasons you may need or want to use FTE for your business. Some companies need to track FTEs because of laws such as the Patient Protection and Affordable Care Act (ACA). Laws stipulate that companies with 50 or more FTEs must offer group health insurance. Keep in mind that the ACA considers 30 hours one FTE. Even if your business counts 40 hours a week per FTE, it’s 30 hours in the eyes of the ACA.

You may also want to use FTE for the following:

  • Calculate personnel requirements for projects you’re working on
  • Budgeting your resources
  • Salary calculation
  • Accrual of paid time off for employees
  • Analysis of staffing

Steps to Calculate FTE

As noted above, FTE is expressed as a unit of measurement that directly relates to how many hours a week the employee works. You can calculate FTE by taking the total number of hours worked by part-time employees in a week, month, or year plus the total number of hours worked by full-time employees and dividing by the average number of hours worked by full-time employees. (For a year, that is 2,080 hours with 40-hour workweeks and 1,560 hours with 30-hour workweeks, which is considered full-time for ACA reporting).

You can follow these steps to calculate it accurately:

Start by creating a list of all your employees and the hours they worked.

Now, you can separate your employees into two lists, which include full-time and part-time employees. Be sure to keep the hours they worked next to their names.

Add up all the employees that work full-time and the number of hours they work in one column and do the same for the part-time employees in another column. It will look like this:

  • Full-Time Employees: 15
  • Hours worked per week: 40
  • Part-time Employees: 20
  • Hours worked per week: 15

Accounting for vacation and holiday time, let’s assume the employees work 40 weeks a year. The next step is to multiply the number of employees by the hours by the number of weeks (40). Using the example above, you would have the following:

  • Full-time employees: 15 x 40 x 40 = 24,000
  • Part-time employees: 20 x 15 x 40 = 12,000

In some instances, your employees won’t all work the same number of hours. So, you may have several columns of information that you’ll need to multiply for the FTEs.

This provides the total number of FTE hours per year. You may want to determine the monthly amount or even the weekly amount. You can easily adjust this by multiplying the appropriate monthly hours or weekly hours versus yearly hours.

If you want to find out more about the FTE value for a specific position, you can divide the number of hours worked by the number of hours considered to be full-time. If you use 40 hours as full-time, someone who works 35 hours has a 0.875 FTE. Someone who works 30 hours has a 0.75 FTE.

Some businesses may realize that they are getting more benefit or production out of full-time employees, or it could be the other way around.

FTE Calculation Example

Let’s examine a sample company to see how an FTE would work. Here is an example:

The Fusion Company is bidding on a contract and needs to ensure they charge the right amount. They need to know the appropriate number of employees to do the job. The job is estimated to take about 750 hours of work, and the bid calls for you to complete the work in 60 hours. Here is the FTE calculation that management can use:

750 (total hours) / 60 (hours in the workweek) = 12.5 FTE

This indicates that the company will require 12.5 employees to work a full-time shift each day to fulfill the requirement. The company can select eight full-time (40 hours a week) employees and four part-time (20 hours a week) employees or any other combination that equals 12.5 FTE. Keep in mind that two part-time employees who work 20 hours a week will equal one FTE.

Understanding FTE can assist management with many aspects of business operations. Whether it’s for project management or ACA compliance, knowing how to calculate it will be an asset.

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COB Meaning — And How to Use It for Clear Communication

COB - Close of Business. Computer keyboard on the office table.

In business correspondence, it is normal to see a variety of acronyms used in place of common business terms — for instance, COB meaning. Over time, these acronyms become commonplace and easy to understand. However, when you first encounter a business acronym in an email, you might have questions about the specific meaning of the term.

One common acronym used in business emails is COB. In this article, we’ll not only define COB meaning but also how you can use it, best practices for using COB in an email, and tips for employers as they implement acronyms into daily correspondences with employees. Let’s get started.

What Is the Meaning of COB?

COB stands for “close of business.” This acronym is often used in emails to indicate either a deadline or to let the recipient know when to expect a report or response. However, when you are working with clients or employees across different time zones, what constitutes “close of business”?

In the U.S., close of business usually refers to 5 p.m. Eastern Standard Time, regardless of where you are located. This helps ensure that teams across time zones are on the same page.

Why is Eastern Standard Time used to indicate close of business rather than Pacific, Mountain, or Central Time? Professionally, most companies have adhered to this practice due to the closing of the stock market, which takes place at 5 p.m. in the Eastern Standard Time zone.

Examples of COB Meaning in Email

To help showcase the COB meaning in email, check out the following examples of how you can use this acronym to indicate a timeline:

Example 1:

Dear Mr. Sancko,

We look forward to adding your marketing data to our upcoming report to the leadership team. Please send over your department’s marketing data by COB (5 p.m. EST) on Friday, September 2, to ensure inclusion in our report.

If you have any further questions, please let me know.

Sincerely,

Janice Langley

Example 2:

Hi Sarah,

I’m looking forward to including your slides in our marketing presentation to the digital transformation team. I am touching base to remind you to please have your final presentation slides emailed to me by COB on Monday, September 5, 2022.

If you have any further questions, please don’t hesitate to reach out.

Sincerely,

Bernard Kringle

Example 3:

Hi Janet,

Thank you for completing the first step in applying for our marketing manager position. Please make sure that you have completed your application by COB (5 p.m. EST) on Friday, September 23, 2022, to be considered for this role.

If you have any further questions, please don’t hesitate to reach out.

Sincerely,

Mary Rain

COB Vs. EOD

Another common acronym used in business correspondence that is used to indicate a timeline is EOD. EOD stands for “end of day” and carries a similar meaning to COB. However, the difference between COB and EOD is that EOD typically refers to the sender’s time zone. For example, if a manager writes to their employee and they both work in the U.S. in Central Standard Time, they might use EOD to indicate that a task should be completed by 5 p.m. Central Standard Time.

Common uses for EOD include the following:

  • All time card submissions are due by EOD.
  • Please make revisions to this document by EOD.
  • To be considered for this role, please submit your application by EOD.
  • To be included in our presentation, we request all slides to be sent over by EOD.

When using COB versus EOD, it is best to use COB to discuss deadlines with organizations or employees spanning time zones. EOD is better for communicating with team members who you know reside in the same time zone as you. For example, if you are messaging a colleague through an employee chat and you both work in the same office, you might request information for a project by EOD. However, if you were asking for the same information from an external source and you are uncertain of the time zone where they operate, it is safer to use COB.

Tips for Using COB in Business Correspondence

While COB can be a handy acronym for indicating a deadline or timeline for a project’s completion, it is important to use the abbreviation carefully. While you might understand COB meaning, that does not mean that everyone you correspond with does. For that reason, be sure to employ these tips when using COB in an email or letter:

  • Make sure to clarify: Along with the abbreviation COB, be sure to also include a timestamp and date. For example, rather than asking for a document to be submitted by COB, you should ask for a document to be submitted by COB (5 p.m. EST) on the Date, Month, and Year. This will help ensure that there is no miscommunication about a deadline.
  • Don’t repeat your ending: The acronym COB stands for close of business. As such, it is incorrect to type out COB business. In this case, the repeat of business is redundant.
  • Help new employees: When you work in a professional business setting for a number of years, it can be easy to grow accustomed to using acronyms. However, as new employees are hired, particularly those with little professional experience, these acronyms can be confusing. Make sure to help new employees learn important business acronyms. You can even outline acronyms your organization commonly uses in onboarding documents or employee resource guides. This will help prevent confusion and ensure that all employees are on the same page when communicating.
  • Don’t include the weekends: When referring to COB or EOD, avoid using these to indicate a deadline over the weekend. Traditionally, business days are only considered to be Monday through Friday. In some rare cases, you might indicate a weekend deadline due to a specialized project or when working with business associates that have weekend hours.

When writing business correspondence, clear communication is key. If you plan to use acronyms, such as COB or EOD, always pair these business terms with a concise explanation of deadline expectations.

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PIP Programme– Performance Improvement Plan and How to Use One (With Template)

Performance improvement plan text on blue clipboard on top of a keyboard with pen and potted plant on wooden desk.

When employers have an employee with performance issues, they often implement a PIP programme (Performance Improvement Plan). A PIP is a formal document that outlines an employee’s performance issues, as well as clear guidance on how they can improve. Ideally, performance improvement plans will support an employee so they can remain gainfully employed with the organization, resulting in a win-win situation for both the employer and the employee.

Where Do You Begin With a Performance Improvement Plan?

First, you need to define why a performance improvement plan might be necessary. A PIP can be a powerful tool for employers to use for a number of performance issues, including when:

  • Behavioral concerns have been persistent.
  • The employee is struggling with meeting sales or quantity targets.
  • The employee is consistently missing assigned milestones and goals.

A PIP tends to be most effective when clear goals can be set for the employee, specifically when it comes to performance issues. Some behavioral concerns, such as harassment or poor professional conduct towards others, can be challenging to address with a PIP. However, running late for work, meetings, and so on can be addressed with a PIP.

Once a clear reason for a performance improvement plan is defined, an effective PIP can be developed to foster a productive conversation between the manager and the employee.

How Do You Develop a PIP?

Ideally, your organization will develop a PIP programme that guides managers with policies and procedures to help develop a PIP plan for employees when needed. A PIP programme can support consistency in how and when a PIP is implemented, which helps to mitigate discrimination concerns and inconsistencies regarding the treatment of employees.

To develop a performance improvement plan, there are some key elements to include:

  • The purpose of the PIP: Provide a statement that describes performance expectations and how not meeting them impacts the department or business.
  • Why the employee is being placed on a PIP: Clearly outline the reasons for implementing the PIP, including the specific issues with evidence to back up the comments.
  • Develop measurable goals and objectives for improvement: Share the goals and objectives the employee is expected to meet, including how to meet them, such as specific training, working with a coworker, and so on.
  • Provide a timeline: Include a timeline and the projected end-date of the PIP, or the date by which you expect the employee to meet the goals.
  • Define the outcomes: Include what will happen if the PIP goals and objectives are met and what will happen if they are not.

How Do You Determine if a PIP is appropriate?

If you’re considering a performance improvement plan for an employee, ask yourself the following questions:

  • Does the employee have persistent performance issues? If the employee makes a single mistake, then a conversation for course correction should be had. However, if the issue is persistent, then a PIP is a wise consideration.
  • Can the performance issues be corrected with a PIP? If the issues at hand cannot be corrected by utilizing a PIP to support the employee, then it shouldn’t be used, as it would prolong the inevitable and wouldn’t be fair to the employee (or the company, for that matter).
  • Will the employee be surprised by the PIP? Ideally, when a PIP is implemented, it shouldn’t come as a surprise to the employee. They should be aware of concerns through regular performance review discussions that have led to them receiving a PIP.
  • Has the employee been provided with the appropriate support to succeed? You want to ensure the employee has been provided with the proper training to succeed in their current position. If they haven’t, the best first step is to ensure they receive the accommodations needed to succeed. If there continues to be an issue, then a PIP might be in order.

Performance Improvement Plan Template

The following performance improvement plan example can be used as a guide for you to develop one for your organization.

Purpose of Performance Improvement Plan

The reason for this performance improvement plan (PIP) is to outline concerns with your work performance, clarify expectations for the position, and give you the opportunity to address the outlined concerns to remain in good standing with [Employer Name].

Performance Improvement Plan

As discussed with [HR or manager], this PIP document serves to offer you a plan to correct your performance in the following areas:

  • Concern #1: You are expected to [employer expectations]
  • Concern #2: You are expected to [employer expectations]
  • Concern #3: You are expected to [employer expectations]

Actions to Take to Address Performance Concerns for Course Correction

To correct your performance, you must complete the following goals and objectives within [number of days].

  • Improvement Goal #1: [Employee Goal]
  • Improvement Goal #2: [Employee Goal]
  • Improvement Goal #3: [Employee Goal]
  • Improvement Goal #4: [Employee Goal]

By following the action plan outlined in this PIP, we are confident you will be able to meet the expectations of your position, [Position Name], in the [Department Name] department at [Employer Name].

If you are not able to meet the expectations outlined above by [date], you will be subject to disciplinary action, up to and including termination.

[Supervisor Signature]

[Supervisor Title]

[Employee Signature]

[Employee Title]

How to Implement a PIP

Once you’re clear a PIP is the right course of action:

  • Develop the PIP using the guidance above.
  • Have a conversation with the employee outlining the PIP purpose and goals.
  • Provide the employee with a copy of the PIP to review and sign.
  • Track the employee’s progress. Have a conversation at the mid-way point of the PIP timeline to assess how the employee is doing. From there, if they meet the expectations of the plan by the deadline, you can move forward with employment as usual. If they do not, however, it’s time to take the next disciplinary action according to your company’s policies.

Sometimes, employees need clarity to improve their performance based on what’s provided with a PIP meaning work improvement assistance is required for the employee to fully appreciate expectations and where they are falling short. Receiving a PIP can be daunting for an employee, though if explained in the best possible light, they’ll understand that the goal is for them to succeed.

On a final note, a PIP is a legal document that could be used in court proceedings and claims against the company. It’s best to share your PIP template with your legal team to ensure it is legally compliant.

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NYC: A New Era in Pay Transparency Has Begun

Employment law book in a court. Labor code concept.

Even somebody living under a rock for the last few months can’t have missed the pay transparency one gathering momentum as it sped toward business reality in New York City. As of today, November 1, 2022, most employers in the big city are mandated to publish their salary-range lists on all posted job ads.

For full transparency on this news (of course), here’s a direct quote from the new law: 

“…employers advertising jobs in New York City must include a good faith salary range for every job, promotion, and transfer opportunity advertised.”

It isn’t hard to imagine some sharp-eyed people focusing in on the term “good faith”, but that’s duly covered by the New York City Commision on Human Rights. The phrase is to be interpreted as a salary-range that the employer “honesty believes at the time they are listing the job advertisement that they are willing to pay the successful applicant(s).”

Anybody want to use that as a loophole? We’d advise against.

Who the New Law Applies to

Any business with four or more employees, including the owner or individual employer, in which at least one person works in New York City. This incorporates full- or part-time employees, interns, domestic workers, independent contractors or any other category of worker under the protection of the New York City Human Rights Law.

Getting down to it, salary range must be included for any position to be performed, in whole or in part, in New York City, whether that work is performed from an office setting, in the field, or from an employee’s home.

NOTE: This will include businesses that exist outside of New York City posting job ads for remote work that can be performed anywhere in the US, which would include, of course, New York City. Conversely, an employer based in New York City will be exempt from the law if advertising a job that will be performed outside of the city.

Simple, right?

How the New Law Breaks Down

The requirement for affected employers is that they post the minimum and maximum salary for any role when listed on internal job boards or external sites like LinkedIn, Glassdoor, Ladders, Indeed or other job search platforms. Further, the law includes any written description of an open role that is printed on a flyer, distributed at a job fair, or used in newspaper classifieds.

Basically, if you’re advertising a job, you are publishing the salary range you are prepared to pay for that position. And, as stated, the range must be complete, not open-ended.

What the New Law Excludes

The new law is specific to base salary (annual or hourly), so it does not require the listing of elements like overtime pay, commissions, bonuses, tips, stock, 401(k) matching, health insurance, time off, severance pay or other types of compensation.

Listing any of those elements is a matter of the employer’s discretion, and something that should be considered from a competitive standpoint. (More later.)

The “Salary Expectations” Question

Asking potential employees about their current or past salaries has been a definite no-no since Labor Law Section 194-a became effective on January 6, 2020. Current or past salary isn’t to be talked about, either directly or indirectly, and certainly not put in writing anywhere.

However, this does not prevent employers asking about a potential employees salary expectations. The question for today, then, is simple: “Is this question now defunct?” In other words, if a candidate responds to a job post with a definite salary range, the question only really covers what place in that range would be acceptable, based on qualifications, experience, and so on.

If the question is still to be asked, orally or in writing, the new law creates a water-tight context for the question.

“Given the salary range offered for this position, what specific salary would you expect?”

Fair question?

What Happens Now?

Some companies are ahead of the game and have been including their salary-ranges prior to the law taking effect November 1. Of course, these are likely companies with the resources to solidify these ranges and channel them through their systems ahead of time. For other companies, this is not so simple – legal deadline or not.

Job seekers and workers have the right post-deadline to file complaints against non-compliant companies, including anonymous tips to NYC’s Commission on Human Rights, who then have the right to initiate an investigation. Individuals who feel they have a claim against a current employer are free to file a lawsuit in civil court.

The end result can be monetary damages paid by companies to wronged individuals and all kinds of jumping through potentially expensive hoops to update the areas in which they are judged to be lacking.

GOOD NEWS? There is a grace period. A first complaint will not result in a civil penalty as long as the employer can show they have corrected the violation within 30 days. Beyond that, “noncompliant” businesses could pay civil penalties up to $250,000 a pop.

Where Else Is This Happening?

A pay-range law currently exists in Colorado and should be in place in the rest of New York State and in California by the end of the year. Most experts are in agreement that pay-range laws will become the norm across the US at some point in the near future, driven by the sheer popularity of the laws among workers and despite the administrative headaches caused to many businesses. 

What About Competition?

If your pay-range isn’t particularly competitive, you should look into areas you can choose to highlight in your job posts. Let’s say a competitor has a better pay-range beyond the budget you have available, but the competitor is advertising for an in-office position, whereas you are open to a remote option. That’s to your advantage.

In a survey conducted in July 2022 by economists Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Brent H. Meyer, and Emil Mihaylov, it was found that 38 percent of companies surveyed (over 500), said they expanded remote work opportunities over the past year “to keep employees happy and to moderate wage-growth pressures.” And a similar percentage stated that they intend to follow this example.

Another method of competition is to highlight all your compensations and benefits that could be of great value to talent, then target the best fit candidates aggressively. One way to do this successfully is to take advantage of Promoted Job Posts from Ladders Hiring Teams, keeping you at the top of search results for highly targeted professionals and essentially starting out with a qualified candidate pool, rather than attempting to build one.

As with anything else, it’s up to businesses to embrace the changes, find ways to make them work, and come out ahead.

So let’s do that, then.

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Exempt Employee – Meaning and Guide

Exempt employee concept written on a paper.

If you are in charge of determining compensation for full-time employees, it will be important for you to understand the difference between an exempt employee and a non-exempt employee. This classification plays a critical role in how you are legally required to pay your employees in the U.S., particularly in relation to overtime pay.

In this guide, we’ll answer the question, “what is an exempt employee,” and we’ll talk about what exempt status means, as well as help you determine when an employee becomes exempt.

What is an Exempt Employee?

In the U.S., employee compensation is regulated by the Fair Labor Standards Act (FLSA). This act establishes parameters around minimum wage, overtime pay, and the standards for employing youth. According to the FLSA, employees in the U.S. must be paid at least the federal minimum wage for all hours worked. However, once an employee reaches 40 hours of work in a single workweek, the FLSA dictates that they must be paid overtime pay equal to not less than time and one-half the regular pay rate.

In some cases, state laws actually provide greater employee protections, such as offering a higher state minimum wage. In these cases, an employer must follow state regulations along with federal regulations.

However, all of the above guidelines apply to what is considered a non-exempt employee. An exempt employee’s pay is regulated differently. The question “What is exempt employee status?”, is best answered by the exempt employee definition as outlined by the U.S. Department of Labor (DOL):

“Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees.”

Essentially, once an employee is considered exempt, their employer is no longer required to abide by the same minimum wage and overtime pay as they must for a non-exempt employee. Exempt employees are often referred to as salaried employees. These employees might work more or less than 40 hours a week, but their compensation remains the same.

Types of Exempt Employees

When determining whether or not an employee is exempt or non-exempt, it is important to first understand the types of exempt employees under federal law. Each type of exempt employee must meet a set of criteria in order to qualify for exempt status. For all exemptions, note that the salary compensation must not be at a rate of less than $684 per week.

Executive Exemption

To qualify for an executive employee exemption, an employee must meet the following requirements:

  • They must be compensated on a salary basis
  • Their primary work must be managing a department of an enterprise or the entire enterprise
  • They must be in charge of directing the work of at least two or more full-time employees
  • They must have the authority to hire or fire and/or the ability to provide recommendations regarding hiring, firing, promotions, and employment status changes of other employees

Administrative Exemptions

To qualify for an administrative employee exemption, an employee must meet the following criteria:

  • They must be compensated on a salary basis
  • Their primary work must include office or non-manual work that is directly tied to business operations or management
  • Their work must allow for independent judgment relating to matters in the business of significance

Professional Exemption

To qualify for a professional employee exemption, an employee must meet the following guidelines:

  • They must be compensated on a salary basis
  • Their work must require advanced knowledge, primarily considered intellectual in nature
  • Their advanced knowledge must be in a field of science or learning
  • Their advanced knowledge must be information that would generally be learned through specialized coursework

Creative Professional Exemption

To qualify for a creative professional exemption, an employee must meet the following criteria:

  • They must be compensated on a salary basis
  • Their primary work must require imagination, invention, or originality of talent in a field that is considered artistic or creative

Computer Employee Exemption

To meet the computer employee exemption, an employee must meet the following standards:

  • They must be compensated on a salary basis
  • The employee must be working as a computer programmer, software engineer, computer systems analyst, or another skilled job in the field of computers

Outside Sales Exemption

To qualify for the outside sales employee exemption, an employee must meet the following criteria:

  • Their work must be defined as making sales
  • They must be regularly working away from their employer’s place of business

It is worth noting that the above exemptions do not apply to blue-collar workers, police, firefighters, paramedics, and other first responders.

How to Determine if an Employee is Exempt or Non-Exempt

As you classify your employees and determine their compensation, it is important to make sure that if you do consider an employee exempt, they meet the criteria outlined by the DOL. Generally, an employee can only be considered exempt if:

  • They receive a salary equivalent to more than $684 per week
  • They are paid this salary regardless of the total hours worked in a week
  • They have duties that align with one of the above exemption statuses, such as professional, administrative, creative, etc.

Frequently Asked Questions

If you still have questions about exempt employees, here’s some additional information.

What does “exempt employee” mean?

An exempt employee is an employee that, due to their status, is exempt from normal overtime wage laws as outlined by the FLSA.

Does an exempt employee have to work a set number of hours?

An exempt employee is not required to work a set number of hours. These employees are paid a salary at a regular interval, regardless of the hours worked. However, many companies have policies requiring that an exempt employee works 40 hours a week. While employees cannot withhold pay if an exempt employee does not work 40 hours a week, they can take disciplinary action.