Work and Employment
Exempt vs Non Exempt: Which one are you?
Understanding whether you're an exempt or non-exempt employee is essential for knowing your rights and ensuring you're being paid fairly for your work. In this guide, we explain the difference between exempt vs non exempt, wage and labor laws, and answer common questions.
By:
Chelsea Spinos
Reviewer:
Timothy Lenahan, Esq.
8 min read • April 16, 2024
Key takeaways
The main difference between exempt vs non exempt employees is how they're paid for overtime.
Non exempt employees may be eligible for overtime pay, while exempt employees are not.
There are a few main categories of exempt employees defined by the FLSA: executive, administration, professional, computer employee, outside salesperson, and highly compensated employee.
To understand if you're an exempt vs non exempt employee, you need to look at factors such as your job duties, salary, and how you're paid.
But figuring out your classification isn't always straightforward. It depends on factors like your job duties, how you're paid, and the laws in your state. In this guide, we explain the difference between exempt vs non exempt employees, wage and labor laws for each classification, and answer common questions you might have.
Entitled to overtime pay
Paid a salary or an hourly wage
Can earn any amount
Could work in any field
Need not meet Duties Test
Not Entitled to overtime pay
Not paid an hourly wage
Must earn at least $684 per week
Job must fit into specific categories
Meets Duties Test
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Under the Fair Labor Standards Act (FLSA), there are two main types of employees in the US in the US: exempt and non exempt. The big difference between them is how they're paid for overtime.
Exempt employees are exempt from getting paid overtime and hourly rates. Typically, managers, administrators, lawyers, executives, etc. They are exempt from the Fair Labor Standards Act.
Non exempt employees are regular workers entitled to overtime for any hours over 40 per week.
Seems easy? Not so fast. Read the details below on whether or not you’re classified correctly and if your role should be considered exempt vs non exempt.
Understanding whether you fall into the exempt or non-exempt category is crucial for ensuring you are fairly compensated for your work.
An exempt employee is usually in a role like management, administration, sales, or certain computer jobs. Instead of getting paid hourly, they receive a fixed salary. And unlike non-exempt employees, they don't earn extra pay for working beyond the usual 40 hours a week.
You may be likely an exempt employee if you meet these criteria:
✓ You manage 2+ people
✓ You are an executive
✓ Your work requires certain licenses
✓ You are a software engineer or designer
✓ Your work is mostly administrative in nature
Examples of exempt employees
Executives
Doctors
Office managers
Graphic designers
Lawyers
Software Engineers
Teachers
Outside Salespeople
Accountants
Examples of non exempt employees
Retail associates
Receptionists
Construction workers
Factory workers
Food service workers
Electricians
Shift workers
Interns
Temporary workers
Employees who are exempt from overtime pay are typically classified as exempt under the Fair Labor Standards Act (FLSA). These exemptions are based on specific criteria related to job duties, salary level, and other factors.
Here are the main categories of employees who are commonly exempt from overtime pay:
Executive exemption
The executive exemption applies to employees whose main duties involve managing a department, directing the work of other employees, and having the authority to hire, fire, or make significant decisions.
Executive exempt employees often include managers, supervisors, and executives.
Administrative exemption
The administrative exemption applies to employees whose primary duties involve office or non-manual work directly related to the management or general business operations of the employer or the employer's customers.
Administrative exempt employees often include administrative assistants, human resources personnel, and financial analysts.
Professional exemption
The professional exemption applies to employees whose primary duties involve work that requires advanced knowledge in a field of science or learning, customarily acquired through prolonged study or specialized instruction.
Professional exempt employees often include lawyers, doctors, engineers, and architects.
Computer employee exemption
The computer employee exemption applies to employees whose primary duties involve computer systems analysis, programming, or software engineering, and who are paid at least a specified minimum salary or hourly rate.
Computer employee exempt employees often include computer programmers, software developers, and systems analysts.
Outside sales exemption
The outside sales exemption applies to employees whose primary duties involve making sales or obtaining orders or contracts for services or facilities, and who regularly work away from the employer's place of business.
Outside sales exempt employees often include sales representatives and account executives who work in the field.
Other exempt categories
Additionally, If you fall into one of the categories below, you may be exempt from the FLSA's overtime laws:
Babysitters
Companions for the elderly
Federal criminal investigators
Fishing employees
Homeworkers making wreaths
Newspaper deliverers
Switchboard operators
Airline and railroad employees
Certain amusement/recreational employees
Boat salespeople
Domestic employees who live-in
Police and firefighters who work in small public police and fire departments
Local delivery drivers
Motion picture theater employees
Radio station and television station employees in small markets
Taxicab drivers
Certain financial services industry employees
Certain registered nurses
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Wage and labor laws differ for exempt and non exempt employees under the Fair Labor Standards Act (FLSA).
Here's a quick view of how exempt and non-exempt statuses differ under the FLSA:
Pay
Overtime pay
Recordkeeping
Breaks
Job duties
Exempt
Paid a set salary
Not eligible to get extra pay for overtime
Hours are less strictly monitored
Might not have scheduled breaks
Generally have more flexibility in their tasks
Non exempt
Paid hourly, must receive at least minimum wage
Eligible to earn extra pay (time and a half) for working more than 40 hours a week
Employers need to keep track of hours worked
May have specific break and meal period requirements
Expected to perform specific job duties and responsibilities that meet the FLSA regulations
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Minimum Wage
The FLSA mandates a federal minimum wage that non exempt employees must be paid for all hours worked.
As of January 2022, the federal minimum wage is $7.25 per hour, but states may have higher minimum wage rates that employers must adhere to.
For instance, the federal minimum wage in New York is $15.00 and $16.00 for New York City, Nassau County, Suffolk County, and Westchester County.
Overtime pay
Non-exempt employees are entitled to overtime pay of at least 1.5x their regular rate of pay for any hour worked beyond the standard 40 hour workweek. This is known as time and a half pay – calculate time and a half here.
Exempt employees, on the other hand, are exempt from overtime pay requirements and don’t receive extra compensation for working beyond 40 hours per week.
Recordkeeping
Employers are required to keep accurate records of hours worked and wages paid for non-exempt employees. This includes recording regular hours, overtime hours, and any deductions from wages.
Exempt employees generally don’t require detailed record keeping for their hours worked.
Job Duties and Responsibilities
The FLSA outlines specific criteria for determining whether an employee qualifies for exemption based on their job duties and responsibilities.
These criteria vary depending on the exemption category – executive, administrative, and professional. Employers must ensure that exempt employees meet these criteria to classify them correctly.
Many states have their own laws regarding exempt and non exempt employees, which can differ from federal regulations.
Some states with notable differences in employment laws include California, New York, Massachusetts, Washington, and Oregon.
Exempt vs non exempt – California
California has its own rules for pay and overtime, often offering more protections for workers.
Minimum Wage: California's minimum wage is higher than the federal minimum wage and varies depending on the size of the employer and the location within the state. As of January 2024, the minimum wage is $16 per hour.
Overtime Pay: California law mandates overtime pay for hours worked beyond a standard 8-hour workday or 40-hour workweek, with additional requirements for hours worked beyond 12 in a day.
Overtime rates are typically 1.5x the regular rate of pay (time and a half pay), with 2x the regular rate for hours worked beyond 12 in a day or after 8 hours on the seventh consecutive day of work in a workweek.
Exemption Criteria: California has specific criteria for exempt status, including minimum salary thresholds and job duties that differ from federal standards. The state also has additional exemptions and requirements for certain industries.
Meal and Rest Breaks: California law requires employers to provide meal and rest breaks to employees based on the number of hours worked, with specific requirements for timing and duration.
Exempt vs non exempt – New York
New York also has its own minimum wage and overtime laws, which are different from the national rules.
Minimum Wage: New York's minimum wage is higher than the federal minimum wage and varies depending on the location within the state and the size of the employer. As of January 2024, the minimum wage rate range from $15 to $16 per hour.
Overtime Pay: New York law mandates overtime pay for hours worked beyond 40 in a workweek, with additional requirements for hours worked beyond 10 in a day for some industries. Overtime rates are typically 1.5x (time and a half) the regular rate of pay.
Exemption Criteria: New York has its own criteria for exempt status, including minimum salary thresholds and job duties that may differ from federal standards. The state also has additional exemptions and requirements for certain industries.
Exempt vs non exempt – Massachusetts
In Massachusetts, there are specific rules about who can be exempt from certain pay regulations.
Minimum Wage: Massachusetts has a higher minimum wage than the federal minimum wage. As of January 2024, the minimum wage is $15 per hour.
Overtime Pay: Massachusetts law mandates overtime pay for hours worked beyond 40 in a workweek, with additional requirements for hours worked beyond 8 in a day. Overtime rates are typically one and a half times the regular rate of pay.
Exemption Criteria: Massachusetts has specific criteria for exempt status, including minimum salary thresholds and job duties that may differ from federal standards. The state also has additional exemptions and requirements for certain industries.
Exempt vs non exempt – Washington
Washington has its own laws for things like minimum wage and breaks at work.
Minimum Wage: Washington's minimum wage is higher than the federal minimum wage. As of January 2024, the minimum wage is $16.28 per hour.
Overtime Pay: Washington law mandates overtime pay for hours worked beyond 40 in a workweek, with additional requirements for hours worked beyond 8 in a day. Overtime rates are typically one and a half times the regular rate of pay.
Exemption Criteria: Washington has specific criteria for exempt status, including minimum salary thresholds and job duties that may differ from federal standards. The state also has additional exemptions and requirements for certain industries.
Paid Sick Leave: Washington requires employers to provide paid sick leave to employees for reasons such as their own illness or to care for a family member.
Exempt vs non exempt – Oregon
Oregon has its own pay rules, including who gets overtime and when.
Minimum Wage: Oregon's minimum wage is higher than the federal minimum wage. As of January 2024, the minimum wage ranges from $13.20 to $15.45 per hour.
Overtime Pay: Oregon law mandates overtime pay for hours worked beyond 40 in a workweek, with additional requirements for hours worked beyond 10 in a day. Overtime rates are typically one and a half times the regular rate of pay.
Exemption Criteria: Oregon has specific criteria for exempt status, including minimum salary thresholds and job duties that may differ from federal standards. The state also has additional exemptions and requirements for certain industries.
Paid Sick Leave: Oregon requires employers to provide paid sick leave to employees for reasons such as their own illness or to care for a family member.
Alright, we've broken down the differences between exempt vs non exempt employees and sifted through the legal stuff. Still feeling a bit uncertain which classification you fall under? No sweat!
Let’s dive into some common questions below that might help you gain more clarity.
Yes, your employer can change your classification from exempt to non-exempt, or the other way around, but there are rules they have to follow.
If your job duties or salary don't fit the criteria for exempt status anymore, they might switch you to non-exempt. Or if your job changes so that you now meet the criteria for exempt status, they might switch you to exempt.
They can't just change it for no reason, though. It has to make sense for your job and follow the law.
If they do change it, they should tell you and explain how it will affect your pay and benefits. If you're not sure about the change, you can talk to someone in your company's HR department or get advice from a legal expert.
If you were misclassified as exempt when you should have been non-exempt, you may have missed out on overtime pay for hours worked beyond 40 in a workweek.
In this case, you could be entitled to back pay for any unpaid overtime wages. Check out our Back Pay Guide where we explain what back pay is and how to calculate back pay.
Misclassification can also affect your eligibility for benefits such as paid time off, health insurance, retirement plans, and other employee benefits. If you were incorrectly classified, you may have missed out on these benefits.
So, what should you do if you think you’ve been misclassified?
You may have the right to pursue legal action to recover unpaid wages and seek damages for any harm caused by the misclassification.
Request free consultation with Manifest Law today
Reach out to get an evaluation the strength of your case.
If your job tasks seem more like those of a non-exempt employee, even if your contract says you're exempt, you might still be entitled to overtime pay and other benefits.
Job classifications are not just determined by employment contracts – they also need to comply with legal standards set by the government.
If you are in this kind of scenario, it’s advised to reach out to an employment lawyer. They can look at your job duties, contract, and the law to figure out if you're classified correctly.
Independent contractors are typically considered neither exempt nor non exempt because they're not considered employees. Instead, independent contractors are self-employed individuals.
True independent contractors typically negotiate their compensation on a per-project or per-task basis, rather than being paid a regular salary or hourly wage.
However, if an independent contractor is paid on an hourly basis and their job duties and working conditions more closely resemble those of an employee, there is a risk of misclassification. In such cases, the contractor may be entitled to the same protections and benefits as employees, including overtime pay under the Fair Labor Standards Act (FLSA).
It's important to note that independent contractors are not covered by the FLSA, which sets federal minimum wage and overtime pay requirements for employees. Instead, their rights and obligations are governed by contract law and other applicable regulations related to self-employment and independent contracting.
Yes, non-exempt employees can earn a salary, but they still need to get paid extra for working overtime, just like if they were paid by the hour. Being on salary means they get a set amount of money each payday, no matter how many hours they work.
However, being salaried does not automatically exempt an employee from overtime pay requirements. To be exempt from overtime pay, an employee must meet specific criteria outlined by the Fair Labor Standards Act (FLSA), like having specific job duties and earning a certain salary amount.
So, even if they're on salary, non-exempt employees still get paid extra for working more than 40 hours a week. Employers need to keep track of their hours and make sure they're paid the right amount for any overtime they put in.
Yes, even if you work part-time, you could still be exempt from certain labor laws under the Fair Labor Standards Act (FLSA). It's not about how many hours you work but rather about the type of work you do.
If your job involves specific responsibilities and meets certain criteria set by the law, like being in a managerial or professional role, you might be exempt from rules about overtime pay, even if you're not working full-time hours.
Just remember, being exempt isn't about how much you work but about the nature of your job.
Under federal law (FLSA), highly paid employees might not get overtime pay if they earn above a certain salary and have certain job duties.
But, state laws, like those in New York (NY), might have different rules. In New York, even if you earn a lot, you could still get overtime pay if you work more than 40 hours a week.
It's important to know the rules in your state to make sure you're getting paid fairly for your work hours.
Whether you're classified as an exempt vs non exempt employee, you have rights that ensure you're paid fairly and your work time is valued.
Making sure you're paid for all the hours you put in, receiving at least the minimum wage, and sorting out any paycheck issues is essential. You deserve every bit of what you've earned and worked hard for.
If you're dealing with unpaid overtime, unpaid wages, or issues with an employment contract, Manifest Law is here to help.
We'll listen to your story, walk you through your rights, help gather the necessary paperwork, and handle discussions with your employer so you don’t have to worry.
Schedule a free consultation today and let us help you get the compensation you’re entitled to.
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