Not sure where the previous poster is coming from regarding State law. The law that applies is Fair Labor Standards Act (FLSA) which is a federal law. When it comes to a typical insurance agency, this one is not very difficult. See an attorney if you want to, but it's a fairly easy call. The following wording is from the law itself, and can be found at
http://www.dol.gov/whd/flsa/index.htm
There are only a handful of classes for Exempt Employees:
1. Executive Exemption - is for a Managerial employee. The majority of their duties must be in Management, and they must manage at least 2 employees; and they must have the authority to hire or fire employees.
(Typically Agency Owners, Managers and Department Managers would be the only agency employees who meet this test)
2. Administrative - To qualify for the administrative employee exemption, all of the following tests must be met:
The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week; The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
(CSR's, Account Managers, etc. fail this test because they do not exercise discretion and independent judgement with respect to matters of significance. There have been several court cases which ruled this way)
3. Professional Employees - The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; The advanced knowledge must be in a field of science or learning; and
The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
(An degreed accountant might qualify, but few others in an agency would meet this test)
4. Computer - The employee must be compensated either on a salary or fee basis at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;
The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;
The employee’s primary duty must consist of:
The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or
A combination of the aforementioned duties, the performance of which requires the same level of skills.
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5. Outside Salespersons - The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and The employee must be customarily and regularly engaged away from the employer’s place or places of business.
Therefore, in a typical agency the CSR, Account Exec, Clerical, Receptionist, bookkeeper, cert specialist, etc. would be classified as Non Exempt employees, paid on an hourly rate, and eligible for overtime pay. Be very careful to keep track of the Non Exempt employee's hours worked. The burden of proof is on the Employer, and failure to have documentation means you will lose a lawsuit, and have to pay backpay, according to the Employee's claim. There are many good timekeeping software applications, that allow the employee to clock in/out from their desk computer.
Owners, Producers, Degreed Accountants, and Department Managers can be classified property as Exempt, and paid a salary. They are not eligible for Overtime pay, and time records are not required to be kept for the Exempt employee.
Stephen Bryant, CPCU, CIC, AAI, LUTCF
President
Heritage Insurance Group, Inc.