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Exempt and non-exempt employees are classified based on whether they are entitled to minimum wage and overtime protections under the Fair Labor Standards Act (FLSA). Non-exempt employees generally qualify for overtime pay, while exempt employees must meet specific pay and job-duty requirements to be excluded from those protections.
Exempt and non-exempt are classifications that help determine whether an employee is entitled to minimum wage and overtime protections under the Fair Labor Standards Act (FLSA). The biggest difference is overtime: non-exempt employees generally must receive overtime pay when they work more than 40 hours in a workweek, while properly classified exempt employees are not entitled to FLSA overtime.
An exempt employee is excluded from certain minimum wage and overtime requirements under the FLSA. Common exemptions apply to employees working in executive, administrative, professional, computer, and outside sales roles.
Simply paying someone a salary does not automatically make them exempt. Depending on the exemption, an employee may need to meet specific requirements related to how they are paid, how much they earn, and the type of work they perform. Job titles alone don't determine exempt status.
Non-exempt employees are covered by the FLSA's minimum wage and overtime protections. In most cases, they must receive at least the applicable minimum wage for all hours worked and overtime pay of at least one and a half times their regular rate for hours worked over 40 in a workweek.
Non-exempt employees can be paid hourly or on a salary basis. What matters is whether the employee meets the requirements for an FLSA exemption, not simply how their paycheck is structured.
Employers should also consider state and local wage and hour laws. Some jurisdictions have different minimum wages, overtime requirements, salary thresholds, or exemption rules that provide employees with greater protections than federal law.
The main difference is eligibility for minimum wage and overtime protections under the FLSA. Non-exempt employees generally qualify for overtime pay when they work more than 40 hours in a workweek. Employees who meet the requirements for an exemption generally do not.
No. A salary alone doesn't determine whether an employee is exempt. The employee must meet the requirements of a specific exemption, which may include rules related to compensation and job duties.
The FLSA generally doesn't require employers to pay overtime to employees who are properly classified as exempt. An employer may choose to provide additional compensation, however, as long as its pay practices continue to satisfy the requirements of the applicable exemption.
Getting the classification right helps employers determine how employees should be paid and whether overtime requirements apply. Misclassifying a non-exempt employee as exempt can result in unpaid wages, damages, penalties, and other compliance issues.