If an employee marks on their W-4 (or equivalent state withholding tax form) that they are to be considered exempt from withholding taxes, you will need to make an adjustment to their records within iSolved.
Go to the Employee Management menu in the left sidebar, then click Employee Pay, then Tax Information. To make an employee exempt for Federal Withholding, check the "Block Tax" box in the Federal Income Tax section of the page. Do the same thing under the State Income Tax section if they've claimed exempt for State Withholding.
Please note that employees who claim to be exempt from withholding must file new withholding forms at the beginning of each calendar year to re-claim the exemption. (See the Exemption From Withholding section on the IRS webpage.)