Exempt Vs. Non Exempt Employees: What’s The Difference?
What is a Non-Exempt Employee?
The Fair Labor Standards Act (FLSA) was enacted to ensure businesses and corporations could not take advantage of their employees. The FLSA establishes the minimum wage, overtime eligibility and child labor standards. These rules and regulations apply to both part-time and full-time employees.
When an employee is considered non-exempt, it means they are covered by FLSA standards and regulations. Most commonly, this applies to whether or not that individual can receive overtime pay for working more than 40 hours a week.
Those who are non-exempt from FLSA standards should receive one and a half times the regular rate for any hours worked over the standard 40 hours. However, any paid leave they take during the week will not apply to the traditional 40 hours of work. This means if you take a paid vacation day, but work extra on your other days, you’ll need to spend 40 hours working before you can start receiving overtime.
What Are the Pros to Being a Non-Exempt Employee?
There are benefits and negatives to being a non-exempt employee.
- If you’re non-exempt, you have the option of receiving overtime pay for additional hours spent on the job.
- Non-exempt employees also have more protection under the law.
What Are the Cons to Being a Non-Exempt Employee?
- Most non-exempt employees do not work on salary. This means you may not have a clear idea of how much you’re making week to week.
- Non-exempt hourly employees may also have their time monitored more closely. Because the company needs to pay an additional wage for any additional hours you spend on the job due to the fair labor standard, your boss may constantly check in to make sure you’re productive every minute you’re at work. Dealing with a micromanager can quickly become annoying and overwhelming.
What is an Exempt Employee?
When an employee is considered “exempt,” it means they are excluded from the specific rights created by the FLSA. Typically, an employee who is paid a salary instead of hourly pay will be considered exempt. A full-time exempt employee works at least 40 hours per week.
An exempt employee must be paid an annual salary, so they cannot be paid an hourly wage. And their weekly income can be no less than $455 per week, according to Payscale. That said, just because an employee is paid a salary doesn't mean make they are an exempt employee.
An exempt employee will receive overtime pay for working more than 40 hours a week. Those who hold exempt positions typically have certain duties or responsibilities that cause them to be exempt, insinuating it is common or expected for those individuals to spend more than 40 hours each week working.
There are a few ways an exempt employee may be considered as such. First, a specific employee job will be specifically stated as exempt under the FLSA. These include everything from white-collar positions to certain retail positions. Executives, professional employees, computer professionals and sales employees are just a few of the positions considered to be exempt.
The salary an individual makes will also determine whether or not they are exempt. Recently, the Department of Labor stated they were going to raise the minimum salary of exempt workers to be just over $50,000. Any employee making less than this amount would be considered non-exempt.
So in short, to be clear: The difference between exempt and nonexempt employees is that exempt positions are excluded from minimum wage, overtime regulations, and other rights and protections afforded nonexempt workers.
What Are the Pros to Being an Exempt Employee?
Exempt employees also have negatives and positives. If you're exempt, you:
- Have a steady paycheck you know you can rely on.
- Exempt employees traditionally hold higher positions within the company.
- May also have a bit more freedom while at work. Because the company is going to pay the same amount no matter how many hours you spend working, your boss may pay less attention if you take a longer lunch or you’re chatting with your coworkers. This can give you some additional freedom at work to move along at your own pace.
- Exempt employees also typically earn larger salaries. This additional payment is designed to cover potential extra hours, job responsibilities and expectations within the office.
What Are the Cons to Being an Exempt Employee?
- As an exempt employee, you’re expected to come in early or stay later as necessary.
- Although you may have more authority in your company, your duties require you to work more hours.
- You cannot receive overtime for working more than 40 hours per week.
What Are Some Common Positions for Exempt and Non-Exempt Employees?
Typically, non-exempt employees include:
- Freelancers
- Interns
- Sales Reps Who Work onCommissionn
Exempt employees are those who generally get paid a salary, such as:
- Teachers
- Nurses
- Architects
There is no situation that is “better” for all individuals. What works best for you will depend on your personal preferences and what you’re looking for out of a job. WIll you want to qualify for overtime? Do you need more than the minimum wage to get by? Are you comfortable with tax-exempt status? Depending on your level of experience, income expectations and industry, you may not have a choice between selecting an exempt or non-exempt position. If that's the case, you'll want to set a long-term goal of determining how you can transition between industries or find a more flexible position.
If you have any questions about exempt vs non-exempt classification, don’t hesitate to ask for clarification. (After all, this is what human resources departments are for!) Understanding the expectations, pay structure and other details of any job — whether it has non-exempt status or is non-manual work — is important for ensuring you find the right fit and you’re happy with the job you select. Don’t ignore terms you don’t understand because you’re too embarrassed to ask what they mean.
When you do the appropriate research and fully understand the position, you can find the right career you’re truly happy with — and one that meets your payment expectations.
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