Federal and State Wage and Hour Laws Specify Exemption Status
Non-Exempt and Exempt Job Classifications
Your job classification and all job classifications at Stanford are designated either "exempt" or "non-exempt" in accordance with federal and state wage and hour laws.
A non-exempt designation indicates that employees in these classifications are not exempt from the provisions of the laws, including overtime pay requirements. Hours worked in excess of 8 per day or 40 per week are considered overtime. All employees not classified as exempt must, by law, keep a record of hours worked and be compensated for overtime hours (see overtime policies in Administrative Guide Memo 2.1.5 and the agreement between Stanford University and the SEIU Local 2007 Higher Education Workers).
An exempt designation indicates that employees are exempt from these overtime provisions. Exempt employees are not entitled to receive overtime compensation.
Criteria for Exemption
Both federal and state laws provide tests (salary basis and job duties) for administrative, executive (supervisory) and professional exemptions. Both the salary and duties tests must be met in order for a job to be designated as exempt. The salary test is based on the amount and form of pay received for hours worked. The duties test is based on such factors as time spent in management or administrative duties, independent decision-making and discretionary powers. Common to all exempt jobs is the freedom from immediate supervision and the consistent use of discretion and independent judgment with respect to matters of significance.
Most jobs require a degree of discretion and judgment. However, exempt jobs have higher levels of decision-making or creativity in areas of particular importance to the organization or department. Decision-making in this context implies a choice following the evaluation of various possibilities or courses of action. Participating in the development of substantive departmental policies is an example of an activity of this type. You do not need to be the final decision-maker in order to meet this definition, but you must have sufficient authority to make commitments and decisions which significantly affect the organization or department.
Non-exempt duties are not confined to clerical duties or to duties typically considered routine and repetitive. Using skill in applying techniques, determining which procedures to follow or determining whether specified policies or practices are met (even when there is a range of tolerance) are activities that require judgment but would not be considered exempt. For example:
- An accounting position may be required to ensure that Stanford and external agency policies are followed. These policies may vary so greatly that the employee must refer to various documents because the policies are too numerous to memorize. Though complex, this level of decision-making is non-exempt because there is neither authority to grant exceptions nor substantive authority to interpret these policies.
- Similarly, coordinating administrative processes or explaining policies and processes without the authority to interpret the policies or to commit the department to alternative actions are also non-exempt duties. This is the case even when these duties relate to the academic affairs of the department or have a significant impact in some other way.
- Another example of non-exempt duties is those of the Library Specialist. This position requires knowledge of a large number of very complex cataloguing rules and conventions. Applying that knowledge involves a level of decision-making, but the employees choose from established standards; they do not deviate from those standards. Hence, these duties would also be considered non-exempt.
The laws for exempt designation stipulate that duties requiring discretion or judgment must be the primary focus of the job. This criterion is met if an employee spends more than 50% of his or her time primarily engaged in exempt duties.
Following is a brief description of these types of exemptions under FLSA:
- Executive: This category is comprised of employees whose primary duty involves managing an organization or department.
- Professional: This category is narrowly defined in State law to include employees who are licensed or certified by the State of California such as: attorneys, doctors, certified public accountants, teachers, architects, engineers and various types of artists. (Other professions not included in this list may be considered exempt under the Administrative criteria).
- Administrative: This category applies to employees performing office or non-manual work and is the most commonly applicable exemption. Because administrative exemption criteria are less specific and because of the high level of judgment required in many non-exempt positions, administrative exemptions are generally the most difficult to determine.