Labor Law Exempt Employee

What's the difference between exempt workers and non-exempt workers?

Most job seekers and employee I've asked get that "deer in the headlights look". I used to get that look before I learned what exempt versus non-exempt meant.

My name is Yancey and being an employee I always give top priority to issues like employee salary rights and benefits.

The designation of whether we are exempt vs non-exempt employees is determined by the FLSA. Employers in the United States (or territory/possession) have to obey federal law covered under the (FLSA) Fair Labor Standards Act. FLSA controls employment issues such as;

  • record keeping
  • child labor
  • minimum wage
  • overtime pay

Unless a state's law provides greater benefit to the employee, the FLSA guidelines are predominant. To be protected by FLSA employees working in America must have a "real" employer-employee relationship and comply with one of these requirements;

Enterprise/Employer Coverage Test
Two or more employees are sufficiently engaged in interstate commerce or in the production, handling or selling of goods or materials moved or produced for interstate commerce
The company has gross annual sales of at least $500,000. If the employee works in an industry such as nursing homes or hospitals he/she is excluded from this monetary test.
Individual Employee Coverage Test
A worker's job duties require the manufacture and handling of a product or service for interstate commerce.

exempt workers

Salaried Exempt Employees

Hmmm...Now that you are thoroughly confused, here's the difference between exempt vs non-exempt employees. Companies deciding who has exempt employee status versus non exempt employee status should not be done haphazardly or carelessly. It should involve things like the job title and whether the employee is hourly or salaried. The employee’s job duties for the position are the most important factor to consider. The following distinctions are why every job seeker and employee should absolutely know and understand what their job classification is.

If you are classified as a "non exempt" employee;
  • Your employment is covered and protected by the Fair Labor standards Act (FLSA)
  • The lowest your employer can pay you is minimum wage
  • You must be paid overtime when working more than 40 hours a week
  • The overtime pay has to be time plus one half of your base pay
  • The employee is entitled to equal pay and child labor protections
If you are classified as an "exempt" employee
  • Your employment is generally not protected and covered by FLSA
  • The employer may not have to pay you the minimum wage
  • the employer must pay a set salary
  • The employer may not have to pay you overtime after 40 hours worked

The differences between exempt employees and non exempt employees relating to being hourly or salaried are also affected by the job description. This is why I always get an update from HR on my job description once a year. Employers have to pay you a salary if you are "exempt". Employees paid hourly are always "non-exempt", but can be paid a salary. Salary workers can also be non-exempt or exempt?!? Yes I know it can be very confusing. Not understanding this important difference causes some employers problems with the FLSA.

exempt workers

Exempt vs Non Exempt Employee

Employees and employers must understand the exact requirements for being "exempt" according to the duties performed before concluding the employee is an "exempt worker". According to the U.S. Department of Labor (DOL) the following are some examples of exempt employee positions;
  • Executive, administrative, professional and outside sales employees
  • Farm workers
  • Commissioned sales people
  • Certain computer professionals
  • Drivers, driver's helpers, loaders and mechanics
  • Employees with disabilities

Here are some examples of non-exempt employment jobs;
  • production workers
  • customer service workers
  • service maintenance
  • clerical
  • skilled trades
  • pharmacy assistants

According to FLSA non-exempt employees can be salaried, hourly, piece meal or on commission. Labor law exempt workers must make a minimum of $23,600 a year, paid on salary, perform "exempt" job duties and comply with a three level test to be truly "exempt" under FLSA guidelines. Learn more about the "three level test" by following this link to my page on FLSA compliance.

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Exempt Workers to Salaried Employee Rights


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