Exempt vs. Non-Exempt Employees

When a worker is classified as “non-exempt” it means that an employer is required by law to pay them overtime at time and one half their regular hourly rates under the Fair Labor Standards Act (FLSA) when working over forty hours per week. On the other hand, an employee who is classified as “exempt” is not required to be paid overtime by their employer under the FLSA, and is usually paid a set salary regardless of their hours worked during the week.

Who is Considered Exempt?

There is certain criteria that has been established by the FLSA that must be met in order for an employee to be considered exempt from receiving overtime pay under the law. They include executive, administrative, or professional exemptions. A worker may also be considered exempt if they work in outside sales or work in computer management role. Additionally to be considered exempt an employee must earn a salary of at least $455 per week and their job duties and responsibilities must also qualify as them as exempt:

• Executive Exemption: If an employee’s job duties primarily involve managing a department of a business or the company as a whole, they may qualify as being exempt from overtime pay under the FLSA. Additionally, to be considered executively exempt, the employee must have the authority to hire or fire employees, or at least recommend these actions.
• Administrative Exemption: If an employee’s job responsibilities primarily include managerial office work that relate to business operations they may be considered administratively exempt under the FLSA. The employee must also be able to make decisions and exercise discretion regarding important matters.
• Professional Exemption: If an employee is considered professionally exempt from receiving overtime under the FLSA they must fall under these two subcategories: learned professional exemption or creative professional exemption. If an employee’s primary job duty requires them to use advanced knowledge typically acquired from a higher education like graduate school and exercise discretion and judgment they could fall under the learned professional exemption. If an employee’s job duties involve originality and invention for their work in a creative industry, they can be considered exempt under the creative professional exemption.
• Highly Compensated Employees: If an employee is earning over $100,000 per year and is primarily responsible for office or non-manual work, they may also be considered as exempt from overtime pay if one or more their responsibilities fall under the executive, administrative, or professional employee exemption.