Login

Member Portal Join Email List  |   Events  |   BLOG  |   VLOG

Q&A: What is the difference between an exempt employee and a non-exempt employee? And how do I know who’s who in my office?

Question:

What is the difference between an exempt employee and a non-exempt employee? And how do I know who’s who in my office?

Answer from Kara, JD, SPHR:

 

Good questions. The Fair Labor Standards Act (FLSA) is a federal law requiring that most employees receive at least minimum wage for each hour worked and overtime pay for hours worked over 40 in a workweek. Some employees, however, are not entitled to overtime, while others are not entitled to overtime or minimum wage. Employees who are entitled to both minimum wage and overtime are called non-exempt, while those who are not entitled to both are called exempt.

The FLSA lists quite a few exemptions. The most commonly used (particularly in office settings) are the executive, administrative, and professional exemptions. These are known as white collarexemptions, and employees who are properly classified this way are not entitled to minimum wage or overtime. But, to qualify, each position must pass a three-part test:

  1. Duties: The employee must perform specific tasks (such as managing at least two people) and regularly use their independent judgment and discretion. Each exemption has its own duties test.
  2. Salary level: The employee must make at least $455 per week (equal to $23,600 per year).
  3. Salary basis: The employee must be paid the same each week regardless of hours worked or the quantity or quality of their work. Reducing an exempt employee’s pay is only allowed in very narrow circumstances.

If an employee meets all the criteria under one of the white collar exemptions, the employee may be properly classified as exempt and will not be entitled to minimum wage or overtime pay. If the employee does not meet all the criteria under a specific exemption, they must be classified as non-exempt, and paid at least minimum wage and overtime when applicable.

There are many more exemptions available than those discussed above. If you use the search bar in the HR Support Center and type in exemptions, you’ll find dozens of resources to help you learn more.

 Sign up to get advice from an HR Pro!

Kara practiced employment and bankruptcy law for five years before joining us and was a Human Resources Generalist at an architecture and engineering firm for several years prior to that. As an attorney, she worked on many wage and hour and discrimination claims in both state and federal court. She holds a Bachelor of Arts degree from Oregon State University and earned her law degree from Lewis and Clark Law School.

Related Blogs

14 Jun 2018
Q&A: When is it appropriate to use a performance improvement plan as opposed to a disciplinary action notice or a record of employee conversation?
Question: When is it appropriate to use a performance improvement plan as opposed to a disciplinary action notice or a record of employee conversation? Answer from Megan, JD: Performance improvement...
07 Jun 2018
Q&A: If we require employees to arrive ten minutes early to prepare for the start of their shift, do we have to pay them for this extra time?
Question: If we require employees to arrive ten minutes early to prepare for the start of their shift, do we have to pay them for this extra time? Answer from...
31 May 2018
Q&A: How do I track FMLA leave?
Question: How do I track FMLA leave? Answer from Sarah, PHR, SHRM-CP: After determining that a leave is covered by FMLA, you should begin tracking time against the 12-week entitlement....
Subscribe For Updates

Subscribe For Updates

Get more info on our latest course, Side Hustle Blueprint. Human Resources is your JOB. Entrepreneurship is your DREAM. 

You're all set! Check your email NOW.