Exempt vs Non-Exempt Employees – The Law in Nevada

Non-exempt employees in Nevada who have been misclassified as exempt may be missing out on wage and hour protections guaranteed by the FLSA (Fair Labor Standards Act), including:

• overtime pay rates in Nevada,
• minimum wage in Nevada,
• half-hour lunch breaks in Nevada, and/or
• paid rest breaks in Nevada

Most blue collar employees who are paid hourly wages qualify as non-exempt, whereas most white collar employees who are salaried are exempt. Misclassified non-exempt employees have various legal options, including:

• filing a wage claim with the U.S. Department of Labor or the Nevada Labor Commissioner, or
• suing the employer in civil court (including possibly a class action lawsuit).

Depending on the case, misclassified employees may be able to recover:

• back pay plus interest,
• liquidated damages,
• attorneys’ fees and court costs, and
• possibly punitive damages

In this article, our Las Vegas Nevada labor law attorneys discuss:

• 1. Exempt v. non-exempt employees
• 2. Misclassification of non-exempt employees
• 3. What misclassified employes can do
• 4. Damages

1. Difference between exempt and non-exempt employees in Nevada

The primary distinction between exempt and non-exempt employees is that exempt employees are unprotected by state and federal wage and hour laws. Protections that apply only to non-exempt employees in Nevada include:

• overtime pay (1.5 times a regular hourly wage, a.k.a. “time and a half” pay);
• minimum wage;
• 10-minute paid rest breaks every four hours; and
• 30-minute unpaid meal breaks during an eight-hour shift

In most cases, Nevada law mirrors federal law regarding what jobs qualify as exempt and which do not. As discussed below, white-collar workers are usually exempt while blue-collar and clerical workers are generally non-exempt.¹

1.1. Non-exempt employees

Non-exempt employees generally comprise “blue-collar workers.” Many non-exempt employees are paid on an hourly basis, but some can be salaried. Common examples of workers that are usually non-exempt include:

• customer service workers
• production workers
• clerical workers
• waitstaff
• electricians
• carpenters
• plumbers
• iron workers
• construction workers
• mechanics
• electricians
• manual laborers
• paramedics and first responders
• firefighters
• correctional officers
• parole and probation officers
• police officers, deputy sheriffs and detectives²

1.2. Exempt employees

Exempt employees generally comprise “white collar” workers and employees who are paid a salary (though some can be paid hourly). The five main categories of exemption include:

1. Executive workers
2. Administrative workers
3. Professionals
4. Outside salespeople
5. Computer professionals

Note that “highly compensated employees” who make at least $107,432 a year and independent contractors are also exempt.³

1.2.1. Executive exemption

Exempt executive employees typically meet the following conditions:

• they receive a salary of no less than $844 a week;
• their main duty is to manage the enterprise (or department thereof);
• they direct at least two (2) other full-time employees; and
• they have the authority to hire and fire other employees, or else they influence hiring and firing decisions

Examples of executives may include senior vice presidents of a business or a newspaper editor-in-chief.⁴

1.2.2. Administrative exemption

Exempt administrative employees typically meet the following conditions:

• they receive a salary of no less than $844 a week;
• their main duty is to perform office or non-manual work directly related to the company’s management or general business operations; and
• they may exercise their discretion and independent judgment in significant matters, and they perform more than just clerical work

In short, administrative workers support a business. They often work in the following departments:

• payroll and accounting
• human resources
• public relations⁵

1.2.3. Professional exemption

Under federal law, exempt professional employees typically meet the following conditions:

• they receive a salary of no less than $844 a week; and
• their main duty is to perform work intellectual in character and requiring advanced knowledge that both:
  • is in a field of science or learning, and
  • is customarily acquired by a lengthy course of specialized education

In short, professionals require advanced education or training. Examples include:

• doctors and registered nurses
• dentists and hygienists
• chiropractors
• pharmacists
• veterinarians
• lawyers
• teachers
• accountants
• architects
• social workers and therapists⁶

1.2.3.1. Exempt professions with no salary threshold

Unlike federal law, Nevada specifies that employees may also be exempt if they are licensed or certified as certain professions even if their salary is less than $844 a week. Some of these exempt professions include:

• creative professionals, including journalists and any type of artist
• opticians
• interior designers
• contractors
• interpreters
• land surveyors
• environmental health specialists
• massage, physical, or music therapists
• barbers
• cosmetologists⁷

1.2.4. Outside sales exemption

Exempt outside sales employees typically meet the following two conditions:

1. The employee’s main job is to make sales or obtain orders or contracts for services or the use of the employer’s facilities; and
2. The employee is regularly away from the employer’s place of business.⁸

1.2.5. Computer exemption

Exempt computer professionals typically meet the following three requirements:

1. they receive a salary of no less than $844 a week or an hourly wage of $21.10;
2. they are employed as either a:
   1. computer systems analyst,
   2. computer programmer,
   3. software engineer, or
   4. other similarly skilled workers in the computer field; and
3. their primary job comprises either:

• • 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.⁹

2. Misclassification of non-exempt employees as exempt

Employers are required to classify their employees as either exempt or non-exempt for payroll and tax purposes. Sometimes employers innocently misclassify their non-exempt employees as exempt due to a clerical error or misunderstanding of the law. But other times, the misclassification is on purpose because they want to save money.

Employers often prefer to have exempt employees instead of non-exempt employees. One reason is that exempt employees are not entitled to “time and a half” overtime pay and other protections, such as minimum wage, half-hour lunch breaks, and paid rest breaks.

Furthermore, non-exempt employees often cause more paperwork: Non-exempt employees often have to keep timesheets so employers can calculate how many hours of work to pay for and whether the employee worked any overtime.

Employers who misclassify non-exempt employees as exempt — whether by accident or on purpose — face serious tax penalties as well as lawsuits by the Department of Labor or misclassified employees. As discussed below, employers may be forced to pay out much more money than they save from misclassifying their employees.

3. What to do if an employer misclassifies a non-exempt employee as exempt

Employees who are misclassified as exempt are encouraged to talk with their employer (or whichever department controls payroll). If the employer inadvertently made a mistake, the employer can correct the error with the IRS and pay the employees any back wages they may be due.

But if the employer refuses to comply with the employee’s “good faith effort” to rectify the situation, the employee can consider filing a claim with the Nevada Labor Commissioner or bringing a lawsuit.

3.1. Filing a wage claim

Misclassified employees can seek the help of the Nevada Labor Commissioner by completing a claim form online (not through email or fax). If possible, the employees should attach any supporting documentation that helps to prove that they are in fact non-exempt. Examples may include:

• pay stubs
• time records
• witness information

The Commission may then investigate the matter — which can include holding a hearing similar to a small-scale trial. If the Commission finds in the employee’s favor, it can issue a binding order to the employer to correct the employee classification and to pay any back pay the employee may be due.

Note that the Commissioner looks back only two (2) years prior to the date of the claim. Therefore, employees who were misclassified for more than two years could receive back pay for only the prior two years.¹⁰

Also note that employees may prefer to file a wage claim not with the Nevada Commissioner but with the U.S. Department of Labor instead. An experienced labor law attorney would help a misclassified employee decide where would be best to file a claim.

3.2. Bringing a lawsuit

Another route misclassified employees can take is suing the employer in civil court. Although this option is more complicated, may take longer, and almost certainly requires an attorney, it can reap a lot more benefits. Potential “causes of action” may include (among others):

• breach of contract
• unjust enrichment
• bad faith

In many cases, there is more than one employee of a particular company who has been misclassified. The benefit of having multiple misclassified employees is that they may be able to join forces and bring a class-action lawsuit against the employer. Employers are more likely to take class action lawsuits seriously than other lawsuits because of the scale.

The four threshold prerequisites that plaintiffs (the misclassified employees) must demonstrate before a judge will recognize a class action lawsuit are the following:

1. numerosity – that the class is big enough in light of the circumstances of the case;
2. commonality – that all the plaintiffs’ grievances sufficiently overlap substantively;
3. typicality – that the named plaintiffs in the case sufficiently represent all the unnamed plaintiffs in the case; and
4. adequacy of representation – that the named plaintiffs and attorneys serve the interests of the rest of the class¹¹

Similar to filing a claim with the Labor Commissioner, lawsuits have statutes of limitations. Therefore, employees are encouraged to retain legal counsel as soon as they learn that they may have been misclassified.

4. Damages

Workers who prevail in a lawsuit against their employer for misclassification may be awarded:

• back pay plus interest
• attorneys’ fees and court costs
• punitive damages, if the court finds that the employer intentionally misclassified the employee as exempt¹²

Furthermore, the court can order that the employer pay liquidated damages. These damages are equal to the amount of the employee’s unpaid back wages plus interest. In other words, employees may be able to win double damages.¹³

Work in California? See our article on misclassification of non-exempt employees as exempt in California.

Legal References