The terms “exempt” and “non-exempt” refer to the classification of employees based on the Fair Labor Standards Act (FLSA) in the United States.
These classifications determine how employees are paid and whether they are entitled to overtime pay. The key differences between exempt and non-exempt employees are listed below.
Understanding the Difference: Non-Exempt VS Exempt Employee
When it comes to employee classification, understanding the difference between exempt and non-exempt employees is crucial.
This classification affects how employees are paid, particularly regarding overtime.
However, it’s important to note that the classification is not determined by job titles or formal labels but rather by the type of work they do, how they are paid, and how much they are paid.
Non-Exempt Employees FLSA
Non-exempt employees are the majority of workers. They are required to be paid both the federal minimum wage of $7.25 as well as overtime pay at one and one-half times the employee’s hourly rate for all hours worked over 40 in each workweek.
This category includes most people who earn an hourly wage. It’s a common misconception that salaried employees are always exempt—many salaried workers are non-exempt and eligible for overtime pay.
Exempt Employees FLSA
Exempt employees, on the other hand, are not entitled to overtime or minimum wage pay. There are three common exempt classifications:
- Executive: This includes employees with management authority over other employees, typically with authority to hire and fire.
- Professional: This classification includes doctors, engineers, teachers, and professions that require specialized training or advanced degrees.
- Administrative: This applies to high-level office employees who have the authority to make significant decisions on behalf of their employer.
Other, less common exemptions are sometimes hard to understand and define. For example, there are exemptions for railroad workers, truck drivers, outside sales workers, some commissioned retail and service employees, agricultural workers, seasonal entertainment and recreation workers, taxi drivers, and for seafood workers.
FLSA Exempt vs. Non-exempt Employees
| Employee Type | Overtime Eligibility | Minimum Wage Eligibility | Typical Examples |
|---|---|---|---|
| Non-exempt | Yes | Yes | Hourly wage earners |
| Exempt | No | No | Executives, Professionals, Administrative |
Understanding whether you are an exempt or non-exempt employee is crucial as it affects your pay and rights as an employee.
If you believe you have been misclassified, it’s important to seek legal advice.
Remember, the classification of exempt vs. non-exempt employees is not based on job titles but on the nature of work, the method of payment, and the amount of payment.
Always ensure you understand your rights and entitlements as an employee.
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