Childcare HR Compliance 101: Exempt vs. Non-Exempt Employees

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Classifying employees at your childcare center

9 out of 10 childcare businesses misclassify employees according to a recent HR assessment survey we sent to childcare clients.

This is a common issue that many well meaning childcare employers can easily do unintentionally. However, no matter your intentions, you can still face financial and legal consequences if you classify employees incorrectly.

The difference between exempt vs. non-exempt employees

Exempt employees:

  • Are paid on a salary basis
  • Are not entitled to overtime pay
  • Usually have administrative or managerial positions

Exempt employees:

  • Are paid on a salary basis
  • Are not entitled to overtime pay
  • Usually have administrative or managerial positions

How mistakes happen with employee classification

Childcare centers are busy places and sometimes you have to be creative to manage a busy day.

Imagine that your teacher’s assistant calls in sick and a substitute cannot be found that day on short notice. You ask your Managing Director, who is in charge of operations and staff, to pitch in and temporarily assist in the classroom to maintain the proper staff to child ratio. They say yes and they do activities with the students, supervise nap time, and coordinate meals and snacks.

Their efforts help your teachers tremendously and the kids all love the Director.

However, the duties the Director performed actually changes their job description and the classification of the employee from exempt to non-exempt.

These are some of the potential consequences:

  1. Overtime pay: If the Director’s total hours worked exceed 40 hours in that work week they may become eligible for overtime pay.
  2. Labor laws: If the additional non-exempt work leads to violation of wage and hour laws (overtime pay), this may lead to penalties and back pay.
  3. Recordkeeping: Improper records can lead to legal issues if there are disputes about overtime and exemption status.
  4. Worker’s compensation: If the office employee goes into the classroom and is injured or part of an incident while they are performing outside the realm of their documented job description, this will work against the business in terms of liability.
  5. Employee morale: Employees may view the situation as unfair and it may impact the primary duties of the Director.

As a result, it’s important to truly understand the difference between exempt and nonexempt roles and maintain the specified job descriptions for your staff, which should be noted in your employee handbook.

Maintaining accurate records is necessary to properly classify employees, abide by labor laws, and avoid legal and financial issues.

How is your knowledge on employee classification and records?

Perhaps you alone are the “HR department” for your childcare center.

You can take a free HR assessment here!

Your results will allow you to understand where you need to improve to reduce risk and you’ll receive suggested solutions to help you build a stronger HR foundation.

HR all starts with documenting your processes aligned with your state requirements in an employee handbook. Click here to receive an employee handbook builder that you can customize based on your local laws or send us a message about an HR topic that is top of mind: .


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