Exempt vs Non-exempt

What are Exempt Employees?

Salaried workers are not subject to overtime pay requirements since they receive a fixed amount of money at predetermined intervals throughout the year. There is no overtime compensation or even a minimum wage rate for these workers. 

If an employee is exempt, it implies they do not have to be paid overtime. 

According to the Fair Labor Standards Act (FLSA), certain workers are exempt while others are considered non-exempt.

An exempt employee is expected to work somewhere between 40-50 hours per week. An employee must make at least $685 per week or $35,568 per year in pay in order to qualify as exempt.

Furthermore, the FLSA does not cover exempt workers in the same way that it does non-exempt workers. 

What are Non-Exempt Employees?

Workers who do not fall under any of the exemption categories are entitled to both the federal minimum wage and overtime compensation at 1.5 times their regular hourly rate. 

Typically, their salary is determined by the number of hours they put in during a specific pay period. Federal and state laws determine who is non-exempt and when they are entitled to overtime compensation.

If a non-exempt worker works more than 40 hours in a week, they are entitled to overtime pay at time-and-a-half their regular rate. The federal minimum wage for non-exempt workers is $7.25 per hour. However, some states with a higher cost of living have mandated even higher minimum pay. 

They are within the purview of the Fair Labor Standards Act and are not excluded.

Different Types of Exempt and Non-exempt Employees

Here are some examples of exempt and non-exempt employees:

Exempt Employee

• The administrative staff of production and operation teams.
• Salespeople and marketers who work outside the organization. 
• High-ranking personnel, including the CEO, supervisors, managers, and other decision-makers.
• Employees at computer-related vocations, including computer programmers, software engineers, and systems analysts.
• High-skilled workers.

Non-Exempt Employee

Employees who work as interns, wait staff, retail salespeople, wait staff, retail salespeople, and similar positions are not exempt from federal income tax. 

Exempt vs. Non-Exempt

According to the Fair Labor Standards Act (FLSA), overtime compensation is not due to an exempt worker. Non-exempt workers must be paid overtime and are covered by FLSA requirements. They must be paid at least the federal minimum wage, whether they work on a salaried or hourly basis.

Exempt workers are not obliged by law to get overtime pay, which is the primary distinction between exempt and non-exempt workers. 

As a rule of thumb, the following factors are used to determine whether or not a worker is exempt from overtime pay:

• In terms of compensation, an employee meets the criteria for exempt status if they are guaranteed a minimum salary. In most cases, this refers to a person receiving a regular paycheck.
• If an employee's annual salary is less than $23,600, or if their weekly wage is less than $455, then the employee is not exempt from overtime pay requirements.

The Fair Labor Standards Act (FLSA) specifies that in order to be considered exempt, an employee must do executive, professional, or administrative tasks. 

The criteria for inclusion into the exempt category are deliberately vague so as to include almost all workers who, depending on their salary and benefits package, might be considered exempt.