Payroll Client AccessHow do I properly classify an employee? Navigate Employee Classification Requirements with Expert HR Guidance
Wisconsin employers must properly classify their workforce according to both federal and state employment law. Before classifying employees as exempt or non-exempt, employers must first accurately determine if their workers qualify as employees or independent contractors based on federal and state worker classification requirements.
For independent contractors, an individual must meet and maintain all conditions from the independent contractor 9-point test as required by Wisconsin Statute 102.07(8). For employees, employers must then determine exempt or non-exempt status based on Fair Labor Standards Act (FLSA) criteria including job duties, salary levels, and other requirements.
Exempt and non-exempt classification determines overtime pay requirements under federal and state law. Exempt employees do not receive overtime pay, while non-exempt employees must be paid overtime for hours worked beyond 40 in a workweek. Incorrect classification can expose employers to substantial financial liability including back pay, penalties, and legal costs.
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Understanding Employee Classification Requirements
How do I properly classify employees as exempt or non-exempt in Wisconsin?
Properly classifying employees as exempt or non-exempt is crucial for Wisconsin employers. To qualify for exempt status, employees must meet both salary and duties tests under FLSA regulations. The current minimum salary threshold is $35,568 annually ($684 weekly), and the employee's primary duties must meet specific exemption criteria. Common exemption categories in Wisconsin include:
- Executive: Managing enterprise/department and supervising two or more employees
- Administrative: Non-manual work directly related to business operations or management
- Professional: Work requiring advanced knowledge in a field of science or learning
Are salaried employees entitled to overtime in Wisconsin?
Simply paying an employee a salary does not automatically make them exempt. While many salaried employees in Wisconsin are exempt, those who don't meet exemption criteria must receive overtime pay for hours worked over 40 in a workweek, regardless of their salary status.
Classified vs. Unclassified Employment Status
What is a classified vs unclassified employee?
The distinction between classified and unclassified positions primarily affects government and public sector employment in Wisconsin. Classified positions are those covered by the state's civil service system, with standardized pay ranges and job protections. Unclassified positions, such as appointed officials and certain professional staff, operate under different employment terms.
Private sector employers generally don't need to consider classified/unclassified status, as their focus should remain on proper exempt/non-exempt classification under FLSA guidelines and Wisconsin state law.
Need Help with Employee Classification?
The Benefit Companies, Inc. through BenHR offers expert consulting services to help employers navigate complex classification requirements. Our experienced team provides guidance on proper employee classification, ensuring compliance with FLSA regulations and Wisconsin state law while minimizing risk of costly misclassification claims.