Importance Of Having Exempt Employees For Small Business Success

Hardworking employees are one of the biggest and strongest assets of every successful company. When it comes to small businesses, the role of such employees becomes even more crucial due to the availability of limited resources.

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

For a small business to reach its goals in less time, they need employees in crucial roles to work hard at least during the initial years of the business, or during project delivery time. If the employees in these roles are enrolled under regular employee, according to Fair Labor Standards Act (FLSA), they are entitled for minimum wage and overtime pay, which is one and half times the regular rate of pay.

This kind of laws not only prevent the companies to discourage long working hours, but also make it difficult for the company to achieve its objectives on time.

Exempt Employee ActTo 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 computer employees.

Eligibility for exempt employee statusJob title alone do 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’ employeesAccording 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 employeesExempt 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. So, 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.

How exempt employees make you win?Back in 1987, Amgen, an American multinational biopharmaceutical company headquartered in California was ready with its breakthrough product – all the background work was done – the invention, testing, trails, everything is done and the product is ready. Only thing pending is the approval from FDA. But before applying for approval, they need to document the details. Otherwise the approval gets postponed just like what happened with another biotech company, Genentech.

But documenting is not a small process. They need to prepare a detailed report which typically contains 1000s of pages, which takes a great effort and long time. Within this span of time, any of their competitors may secure the approval. So, there were two challenges before them – one was to prepare the report with perfection and other was to submit it before anybody else.

For this the Amgen FDA application team that started its work at their office soon shifted to Simi Valley to avoid unnecessary distractions. At that point of time, nothing was more important for them except the challenges, so they became "Simi Valley Hostages."

All the employees in the team would work in the morning, have a brief lunch break, would work till 6.00 p.m. After a short dinner break they worked in the night. The schedule repeats until the close of the project. This way they worked for 93 continuous days without any personal life and finally created a 19,578 page document, shipped it off to FDA, and got approval.

Imagine how tough it would be for the company if the team of employees are non-exempt. The point we are trying to drive home is you may face such challenges in your business. For small businesses, deadline for a project delivery is a challenge. Unless you have hardworking, committed team who are exempt, you will not be able to deliver results on time.

If you are still having non-exempt employees in key roles, better late than never, convert them into exempt and leverage the talent effectively.

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