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What is the difference between exempt and non-exempt employees?
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Short answer
- Exempt employees are not entitled to overtime pay under the Fair Labor Standards Act (FLSA). Non‑exempt employees are entitled to minimum wage and overtime (generally time-and-a-half for hours worked over 40 in a workweek under federal law).
- “Exempt” is a legal classification based on tests (salary basis, salary level, and the employee’s job duties), not simply whether someone is paid a salary.
Key differences
- Overtime and minimum wage
- Non‑exempt: must receive minimum wage and overtime pay for overtime-eligible hours.
- Exempt: not eligible for overtime (still must meet any applicable minimum wage rules depending on state).
- Pay structure
- Exempt employees are frequently paid a regular salary, but being salaried alone does not make someone exempt.
- Non‑exempt employees may be paid hourly or salaried, but their pay must be calculated to include overtime when applicable.
- Legal tests for exemption
- Salary basis test: generally paid a predetermined salary (not docked for partial day absences).
- Salary level test: pay must meet a minimum salary threshold set by law (federal and many states have different thresholds).
- Duties test: the employee’s primary job duties must fit one of the exemption categories (common federal categories include executive, administrative, professional, outside sales, and some computer employees; there is also a “highly compensated” test).
- Recordkeeping and compliance
- Employers must keep accurate records and classify employees correctly. Misclassification (calling someone exempt when they aren’t) can lead to back pay for overtime, penalties, and litigation.
Examples
- Exempt: a manager who supervises two or more full-time employees and mainly performs managerial duties may qualify as an executive exemption.
- Non‑exempt: a retail salesperson who works variable hours and is paid hourly is typically non‑exempt and must be paid overtime for hours over 40/week.
Important notes
- State laws can impose higher salary thresholds or different overtime rules (daily overtime, different week definitions, etc.). Always check state labor law as well as federal law.
- Classification depends on actual job duties, not job title. Simply labeling a worker “manager” or paying a salary does not guarantee exempt status.
If you’d like, tell me the state and a brief description of the job (duties, pay, supervisory responsibilities, typical hours) and I can help assess whether that position is likely exempt or non‑exempt.
- Exempt employees are not entitled to overtime pay under the Fair Labor Standards Act (FLSA). Non‑exempt employees are entitled to minimum wage and overtime (generally time-and-a-half for hours worked over 40 in a workweek under federal law).
- “Exempt” is a legal classification based on tests (salary basis, salary level, and the employee’s job duties), not simply whether someone is paid a salary.
Key differences
- Overtime and minimum wage
- Non‑exempt: must receive minimum wage and overtime pay for overtime-eligible hours.
- Exempt: not eligible for overtime (still must meet any applicable minimum wage rules depending on state).
- Pay structure
- Exempt employees are frequently paid a regular salary, but being salaried alone does not make someone exempt.
- Non‑exempt employees may be paid hourly or salaried, but their pay must be calculated to include overtime when applicable.
- Legal tests for exemption
- Salary basis test: generally paid a predetermined salary (not docked for partial day absences).
- Salary level test: pay must meet a minimum salary threshold set by law (federal and many states have different thresholds).
- Duties test: the employee’s primary job duties must fit one of the exemption categories (common federal categories include executive, administrative, professional, outside sales, and some computer employees; there is also a “highly compensated” test).
- Recordkeeping and compliance
- Employers must keep accurate records and classify employees correctly. Misclassification (calling someone exempt when they aren’t) can lead to back pay for overtime, penalties, and litigation.
Examples
- Exempt: a manager who supervises two or more full-time employees and mainly performs managerial duties may qualify as an executive exemption.
- Non‑exempt: a retail salesperson who works variable hours and is paid hourly is typically non‑exempt and must be paid overtime for hours over 40/week.
Important notes
- State laws can impose higher salary thresholds or different overtime rules (daily overtime, different week definitions, etc.). Always check state labor law as well as federal law.
- Classification depends on actual job duties, not job title. Simply labeling a worker “manager” or paying a salary does not guarantee exempt status.
If you’d like, tell me the state and a brief description of the job (duties, pay, supervisory responsibilities, typical hours) and I can help assess whether that position is likely exempt or non‑exempt.
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