Difference Between an Exempt and a Non-Exempt Employee

exempt from overtime

Nonexempt employees are covered by FLSA rules and regulations, and exempt employees are not. The Fair Labor Standards Act requires overtime pay for covered, non-exempt employees after 40 hours of work in a workweek. The FLSA requires that employers pay at leastminimum wagefor up to 40 hours in a workweek and overtime pay for any additional time unless the employee falls into an exception category. “FLSA status is driven by what you do in terms of job function, not how you are compensated,” Sanders explains. The difference between an exempt employee and a non exempt employee is that non exempt employees are entitled to overtime pay. Exempt employees, on the other hand, do not qualify for overtime pay. If employees are non-exempt, it means they are entitled to minimum wage and overtime pay when they work more than 40 hours per week.

  • These FLSA exemptions are limited to employees who perform relatively high-level work.
  • A non-exempt employee refers to a worker who is entitled to overtime pay of at least 1.5 times their regular pay rate, in accordance with the U.S.
  • Exempt employees tend to work in roles that require little direct supervision and require special skill or knowledge.
  • Advanced degrees are the most common measure of this, but are not absolutely necessary if an employee has attained a similar level of advanced education through other means .

What’s more, a solution like https://intuit-payroll.org/, can help ensure employees aren’t taking more than their allotted time, and provide evidence if that occurs. Say goodbye to outdated spreadsheets and hello to centralized employee records. Whether you’re collecting social security numbers or sensitive information, BambooHR keeps employee data secure.

Non-Exempt Employees vs. Exempt Employees

The FLSA mandates that employers pay at least the minimum wage for up to 40 hours per week. After 40 hours per week, non-exempt employees must be paid overtime for any additional time they work unless they fall under an exception to the rule such as those who work in specific service or retail organizations. Generally speaking, nonexempt employees receive more protection under federal law than exempt employees. However, most employers treat their exempt and nonexempt employees in a similar manner. The key difference between exempt and non-exempt employees is that non-exempt workers are entitled to certain protections under the Fair Labor Standards Act, a federal law that sets minimum wage and overtime requirements.

  • Under the Fair Labor Standards Act , there are two types of employees – exempt and non-exempt.
  • Requiring an employee to charge absences from work to leave accruals is not a reduction in “pay,” because the monetary amount of the employee’s paycheck remains the same.
  • Similarly, paying an employee more than the guaranteed salary amount is not normally inconsistent with salary basis status, because this does not result in any reduction in the base pay.
  • The law also includes exemptions for specific types of workers in unique industries.
  • Keep in mind that simply relying on job titles is not a proper method of determining exempt status.
  • The $684 weekly wage, resulting in an annual threshold of $35,568, was put into effect on Jan. 1, 2020.

For example, most railroad Non-exempt Employees are governed by the Railway Labor Act, and many truck drivers are governed by the Motor Carriers Act, and not the FLSA. Although unemployment benefits vary from state to state, generally both exempt and nonexempt employees can collect unemployment benefits. But to be sure just what those benefits include, check with your state’s Department of Labor. Exempt employees typically must receive their full salary in any workweek in which they perform work, regardless of the total number of hours actually worked. If your company closes, you must generally pay an exempt employee their full salary if the employee worked any part of the workweek. Employees exempt from the FLSA typically must be paid a salary above a certain level and work in an administrative, professional, executive, computer or outside sales role.

Administrative Assistant Cover Letter Sample

Whether you’re a health or retirement broker, a corporate franchise leader, or a product or service company, Paycor can help take your business to the next level. Review and understand the rules and regulations outlined by the FLSA regarding exempt vs. non-exempt classifications. Department of Labor regulations that apply to the FLSA require when an employee is non-exempt. Base pay is an employee’s initial rate of compensation, excluding extra lump sum compensation or increases in the rate of pay.

  • With typical weekly earnings of $720, they easily pass the salary test to be designated as an exempt worker, since their weekly income exceeds the $684 threshold.
  • Check with yourstate labor departmentfor the latest overtime provisions in your area.
  • To ensure non-exempt employees receive adequate compensation, HR professionals should create an overtime policy that classifies employee roles and prevents future disputes, internally and legally.
  • You don’t get to enjoy this benefit when you are classified as exempt.
  • Whether the duties of a particular job qualify as exempt depends on what they are.
  • The Fair Labor Standards Act requires overtime pay for covered, non-exempt employees after 40 hours of work in a workweek.

An employee may have an executive, professional, or administrative title; however, that does not necessarily mean that the employee is automatically eligible for an exempt classification. Rather, a salary level, salary basis and primary duties analysis should be performed. An employee’s classification as exempt or non-exempt may also affect how their compensable time is measured for certain job-related activities such as travel, being on-call, or work-related training. Exempt employees are paid on a salary or fee basis which means that they typically must receive their predetermined salary each workweek regardless of the quality or quantity of work performed.

State and Federal Labor Laws:

An employee may qualify as performing executive job duties even if s/he performs a variety of “regular” job duties as well. For example, the night manager at a fast food restaurant may in reality spend most of the shift preparing food and serving customers. S/he is, however, still “the boss” even when not actually engaged in “active” bossing duties. In the event that some “executive” decisions are required, s/he is there to make them, and this is sufficient. Cash payments for accrued comp time can be made at any time and must be paid at the regular rate earned by the employee at the time the employee receives payment. If an employee is transferring or moving from one unit to another unit, the unit where the employee accrued the comp time off must pay it out. TheMultiple Appointments Within and Across Employee Groupsmatrix explains overtime pay requirements for employees with multiple appointments.

What is exempt vs non-exempt in Florida?

Employees are either exempt or non-exempt from the FLSA regulations. Exempt employees are excluded from the overtime requirements. Non-exempt employees are paid overtime for time worked in excess of 40 hours in any workweek.

Also, to qualify for exemption from overtime, employees must also meet certain employment tests regarding their job duties and responsibilities. The FLSA guarantees non-exempt employees one and one-half times their normal pay rate for overtime worked during a given work period. Under the FLSA, workers may be considered non exempt if they either earn less than the $684 weekly minimum or have limited scope for self-supervision.