Difference Between an Exempt and a Non-Exempt Employee

Difference Between an Exempt and a Non-Exempt EmployeeDifference Between an Exempt and a Non-Exempt EmployeeThere are two basic types of employees in the workplace exempt employees and non-exempt employees. Whats the difference between these types of workers and the jobs they hold? The most significant difference is pay for overtime work. The term exempt means exempt from beingpaid overtime. There are regulations which govern whether an employee could beexempt from receiving overtime pay. Exempt Employees Certain types of employees, oftenclassifiedas exempt employees, are not entitled toovertime payas guaranteed by theFair Labor Standards Act(FLSA). To add to that, most states have their own wage and hourly satz laws that have even more requirements in plus-rechnen to theFLSA. TheFLSArequires that employers must pay at leastminimum wagefor up to 40 hours in a work week and overtime pay for anyadditionaltime unless the employee falls into an exception category. In addition to the Federal Act, many states have their own set of wage requirements and laws and it is imperative that employers abide by both federal and state law to stay compliant. If an employeeis consideredexempt (vs.non-exempt), their employer is not required to pay them overtime pay. It is at the employers discretion whether or not to pay for hours worked overtime. Some employers might create an employee benefits package with extra perks in lieu of overtime pay. In general,to beconsidered an exempt employee, youmust bepaid a salary (not hourly) and mustperformexecutive, administrative or professional duties. To complicate matters further for employers, there areadditionalfederal, state, andFLSAlaws related to other classifications of workers, such as interns, independent contractors, temporary employees, volunteers, workers in training, and foreign workers, that employersare requiredto abide by. Non-Exempt Employees A non-exempt employeeis entitledto overtime pay through the Fair Labor Stan dards Act (FLSA). Also, some states have expanded overtime pay guidelines. Check with your state Department of Labor website for rules in your location. Employersare requiredto pay time and a half the employees regular rate of pay when they work more than 40 hours in a given pay week. Most employeesmust bepaid the federal minimum wage ($7.25 in 2019) for regular time and at least time and a half for any hours worked over the standard 40. Types of Exempt Employees The Fair Labor Standards Act (FLSA) recognizes three main categories of exempt workers ExecutiveProfessionalAdministrative These categories are purposefully broad to encompass many types of jobs. It is the tasks performed on the job, not the job title alone, which determine exempt vs. non-exempt employment position. TheFLSAguarantees non-exempt employees one and one-half times their normal pay rate for overtime worked during a given work period. Guidelines for Exemption from Overtime Pay Requirements Administrative, executive and professional employees, salespeople, and STEM (Science, Technology, Engineering, and Math) employees canbeclassified as exempt and, therefore, ineligible for overtime pay if they meet the following criteria Employeesare paida salary as opposed to being paid on an hourly basis.Employees earn at least $455 per week.Employeesare paida salary for any week they work. Also, to qualifyfor exemption from overtime, employees must also meet certain employment testsregardingtheir job duties and responsibilities. According to The Society for Human Resource Management (SHRM), the following general conditions must be met to designate an employee as exempt For the executive exemption, employees must have a primary duty of managing the enterprise or a department or subdivision of the enterprise must customarily and regularly direct the work of at least two employees and must have the authority to hire or fire, or their suggestions and recommendations as to the hiring, firing or chang ing the status of other employees must be given particular weight.For the administrative exemption, employees must have a primary duty of performing office or non-manual work directly related to the management or general business operations of the employer or the employers customers, and their primary duty must include the exercise of discretion and independent judgment with respect to matters of significance. For a professional exemption, employees must have a primary duty of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by prolonged, specialized, intellectual instruction and study, or must specialize in a few other similarly, highly specialized fields, such as teaching, computer analytics, and engineering. Exceptions to Overtime Requirements In general,non-exempt employeesearning less than $455 per week, which is $23,660 per year,are guaranteedovertime pay. Some exceptions to this include researchers or those working under an educational or governmental grant. Examples of the Overtime Status of Employees Susan is an exempt employee, therefore not entitled toovertime pay.John is a non-exempt employee, so he works as many overtime hours as he can because he earns one and a half times his hourly wage.Bethany earns $400 per week, so sheis guaranteedto earn overtime for her extra hours at the office.After her promotion and salary increase,Reshmawas no longer a non-exempt employee eligible for overtime pay.Rob took the first of two job offers despite the lower salary because he would be eligible for overtime pay. Some States Have Different Guidelines for Classification of Exempt Workers and tiefpunkt Overtime Pay Not all states have the same guidelines for exempt employees. For example, in California to classify an individual as exempt from overtime requirements, large employers must pay the worker at least $49,920. For small employers, the amount is $45,760.All other employees would automatically be eligible for overtime regardless of job responsibilities. Workers earning over the salary threshold would still need to meet the other criteria for exempt status to be placed on that category. Also, non-exempt employees must be paid overtime wages equivalent to at least 1.5 times the California minimum wage of $12 per hour (for employers with over 26 employees) or $18.50 per hour. In New York, the 2019 NYS salary thresholds vary by location. New York City has a seperate threshold for small and large employers. Nassau, Suffolk, and Westchester counties also have a different threshold than the remainder of New York State. Check with for your State Department of Labor for the latest overtime provisions in your area.