The primary difference between exempt and non-exempt employees is their eligibility for overtime. Under federal law, exempt /non-exempt status is determined by the Fair Labor Standards Act (FLSA). Exempt employees are not entitled to overtime, while non-exempt employees are. In order to qualify as non-exempt or exempt, certain criteria must be met. The answers and information below serve as basic guidelines and are for informational purposes only.
To determine if an employee should be classified as exempt or non-exempt, employers can often perform an assessment based on multiple factors including:
- The type of work they do
- The responsibilities they have in their job
- How much money they earn
State laws may also have different criteria for classification, which also must be followed.
Under federal law, non-exempt employees must be paid minimum wage plus overtime pay if they work more than 40 hours in a workweek. Overtime must be paid at 1.5 times the regular pay rate. Consult the state labor laws in the state where the employee is working for additional requirements. Employees are considered non-exempt, or hourly, unless they qualify for an exemption under federal or applicable state law.
Exempt employees are not covered by the FLSA, and are, therefore, not entitled by law to overtime pay. Most employees classified as exempt work in upper-level positions within their organization, such as executives, professionals, administrators and management. Other occupations are classified by definition as exempt, such as outside sales. Exempt status is considered advantageous to employers because it doesn't limit the hours that an employee can work in a given pay period for the salary earned. Exempt employees often work more than the standard 40-hour week. However, it is important to remember that the job must meet the requirements of the exemption; employers may not override the exemption requirement just because they do not want to pay overtime.
The Department of Labor (DOL) FLSA Overtime Security Advisor helps employers and employees understand their rights and responsibilities under federal employment laws.