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An exempt employee refers to a specific type of employee who is not bound by any obligatory overtime pay. In addition, an exempt employee doesn’t have to comply with the minimum wage rule set by the Fair Labor Standards Act (FLSA).
The salaries of these types of employees are negotiated based on performance which doesn’t fall under any jurisdictions of the FLSA. On the other hand, regular employees who are paid in accordance with the FLSA are known as non-exempt workers.
To qualify for being an exempt worker, an employee must fall under three main criteria such as:
These employees have to be paid an equal amount of salary each week regardless of their working hours. For instance, non-exempt workers get paid for exactly the amount of hours they work. But exempt workers are free from any working hour constraints.
These specific employees must earn at least $684 per week or $35,568 per year. This certain amount is declared by the Department of Labor of the United States and readjusted every year by the authority.
Such workers must be involved in performing duties such as professional, administrative, executive, etc. These criteria may vary in different states but these are the essential elements that separate a non-exempt worker from an exempt worker.
An exempt employee has to perform various types of duties which can be categorized into several major sectors. According to the Fair Labor Standards Act, an exempt worker has to perform their duties under the following categories:
These types of jobs involve performing core duties which means managing two or more full-time workers. An executive employee should also be involved in the hiring and firing process of the workers.
Overall, executives have an authoritative power that allows them to supervise a certain portion of the organization.
This category of employees performs tasks that don’t require any manual intervention. Handling the core business operation as well as supporting the related workers with experience and wisdom is the basic duty of an administrative employee. This type of job also requires decision-making ability and personal judgment from employers.
This category of job requires employees to possess technical skills, creative knowledge, or specialized education. Jobs of doctors, engineers, lawyers, musicians, teachers, etc are parts of professional employment.
Computer-related jobs such as system analysts, software engineers, and programmers are also part of the professional category.
In 2019, the U.S. Department of Labor announced some new guidelines for exempt employees which will be effective from January 1, 2020.
According to the rules, job categories including, executive, administrative, professional, and STEM will be considered exempt. That means employees who fall under these categories will not be eligible for any overtime pay and minimum working hours.
The new guidelines also state that workers who are being paid below $684 a week shouldn’t be referred to as exempt workers.
These employees are in high demand and thus, their salaries are quite high compared to non-exempt or regular workers. These employees can earn a stable salary each week without working extra hours or overtime.
Furthermore, exempt workers get a flexible working environment with lots of benefits like vacation and sick day leaves. Overall, exempt job positions are considered more prestigious and honorable in the eyes of society.
One of the most obvious disadvantages is not being able to get overtime pay from employers. Sometimes employees have to work extra hours for achieving certain organizational goals or projects.
However, since companies are not bound to pay for overtime, most employees work long hours without getting any reward. This can lead to frustration, dissatisfaction, and mental stress among the employees.
Choosing your career path in the exempt employee category can be highly beneficial for the future. But to fall under the exempt category, an employee has to meet certain criteria set by the FLSA.
But, there are also some major disadvantages of the exempt category that you must consider before you take a job in an exempt position. That’s why a proper understanding of the term “exempt employee” is essential for new and old workers.
