The Fair Labor Standards Act (FLSA) is the federal wage and hour law which regulates minimum wage, overtime, equal pay, recordkeeping, and child labor. The FLSA generally requires employers to pay employees at least the minimum wage, and overtime if employees work more than 40 hours in a week. The FLSA does, however, exempt certain kinds of employees from the minimum wage and overtime requirements. These are known as “exempt employees”.
Note: Some states and local jurisdictions have their own wage and hour laws, which may provide greater protection for employees than what is provided under the FLSA. Generally, where federal, state, and local laws conflict, the law that is most beneficial to the employee prevails.
Read more about your obligations under the FLSA and state law here.
We’re making it easier for you to keep track of, and pay, your non-exempt employees with a new tool that will help your company stay on the right side of the law.
- Have a list of all your employees’ classifications ready to go (You'll need to have already classified your employees outside of Justworks at the time of hire). For guidance on how to classify your employees, check out our blog post, Your Guide to Exempt vs Non-Exempt Employees under the FLSA, or speak to your legal team.
- Go to the Exempt/Non-Exempt Wizard in Justworks by navigating to ‘Manage' > Employees’ from your dashboard or clicking here.
- Record the correct exemption status for each employee.
- Note whether any of your employees will need to change pay cycles, select the date you want these changes to take effect and communicate these changes to them ahead of time. For communication tips, this blog post might help.
This article helps you with steps 2-4 above. For guidance on step 1, how to classify your employees, it's speak to your legal team. Justworks cannot help you decide how to classify your employees.
Record Employee Exemption Status using the Wizard
Using our Exempt/Non-Exempt Wizard you can record the exemption status of your employees directly in your Justworks account. To use the Wizard, you’ll need to have already classified your employees outside of Justworks.
If videos aren’t your thing, keep reading for a step-by-step breakdown.
Once you’ve clicked the record statues button, you’ll be taken to a new dashboard that outlines the process on how to mark your employees as either exempt or non-exempt. We’ll walk you through what it means to be exempt, what you need to do in Justworks, and how exemption status impacts time tracking and pay frequencies for employees.
Please note: As much as we would like to assist, Justworks cannot help you decide how to classify your employees.
Once you have determined your employees' exemption statuses, we can help with correctly paying them regular and overtime wages. When you have your employees' exemption statuses on-hand, click "I’m ready to record status."
Record the status of each employee by selecting “Exempt” or “Non-Exempt”.
How does exemption status impact pay cycles?
After you’ve recorded the status for each employee, you’ll need to choose when these changes will take effect. Since some of your employees may now be on different or new pay frequencies, we’ll ask you when you’d like to switch your salaried employees to a biweekly pay frequency.
Keep in mind that even if you will not have to change the pay frequency for any of your employees, you will still be asked for an effective date. This will ensure that, moving forward, any new employees' pay schedules will depend on their exemption status.
Additionally, you will not be able to make other changes, such as raises, to compensation during the period between when you go through the Exempt/Non-Exempt Wizard and the effective date you've selected. Once the effective date comes, however, you will be able to make any changes to your team members' compensation.
Employees who track time (all employees paid hourly, and non-exempt salaried employees) are paid on a biweekly pay cycle. Exempt salaried employees are not required to track time and are paid on a semimonthly pay cycle by default. If you have employees on both pay cycles, you can opt to moving all employees to a biweekly pay cycle. If you do move your exempt employees to the biweekly pay frequency, they will be paid every other Friday for the two weeks prior, the same way your non-exempt employees are.
Now that you’ve recorded statuses for all of your employees, you’ll be able download a report with the status summary and pay frequency for each employee (you can also find this information in the company census).
How do I update statuses in the future?
If you need to make any changes to your employees’ exemption status (either now or in the future), you’ll be able to find this tool by navigating to Employees under “Manage”. After you've gone through the Wizard once, you'll be able to make changes to individual employees' statuses.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.