Exempt vs. Nonexempt: Correct Classification Limits Liability

State and federal laws create two broad categories of employees: those subject to wage and hour requirements (such as meal and rest breaks and overtime) and those who are exempt. Those laws also place the burden of classification on employers, who must demonstrate that any given employee meets the standards to qualify as exempt.

In a recent case, an employee claimed that he could only be classified as exempt if his employer could demonstrate by “clear and convincing evidence” that he fit into one of the statutory exemptions. In a victory for the employer, the U.S. Supreme Court held that the employer needed only to prove the exemption by a lower standard of “preponderance of the