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The Difference Between Exempt and Non-Exempt Employees

One of the most important concepts in employment law involves the distinction between exempt and non-exempt employees. It pertains to the Fair Labor Standards Act (FLSA) and state minimum wage and overtime laws, which govern how employees receive compensation based on the number of hours they work. In short, if you’re “exempt” from the overtime requirements of the FLSA and any applicable state law, then your employer doesn’t have to pay you an overtime premium.

How do you know whether your job falls under the exempt or non-exempt designation? We’ll explore that in this article.

What are Exempt Employees?

Most exempt employees earn a salary, which must be at least $35,568 a year. In some state jurisdictions, that threshold may be higher. It’s also possible to meet the exempt designation if you earn an hourly wage, but only in very limited occupations like computer programmers.

Here is a list of some of the commonly exempt positions.

  • Executives, Administrators, and Select Professionals (salaried employees most of the time)
  • Independent Contractors
  • Outside Salespeople
  • Inside Salespeople who are paid commissions and a higher hourly rate
  • Seasonal Amusement Employees
  • Computer Programmers, Software Engineers, Systems Analysts
  • Newspaper Deliverers
  • Volunteer Workers

A couple of those examples carry a few caveats. One problem we deal with often at the Rowdy Meeks Legal Group LLC is the abuse of the term “independent contractor.” The FLSA, and state minimum wage and overtime laws do not apply to true independent contractors because they are not employees. However, employers often illegally designate employees as independent contractors to avoid paying overtime wages.

Employers likewise illegally misclassify employees as “outside salespersons” to avoid paying overtime. The outside sales exemption is limited to those employees who spend most of their work time away from the office (including any home office) at customers’ home or place of business making sales. Employees who sell over the telephone and/or internet do not qualify for the outside sales exemption. We often see employers illegally classifying mortgage loan officers as outside sales even though mortgage sales do not occur at the customer’s home or business.

What Are Non-Exempt Employees?

Non-exempt workers ARE subject to the FLSA, and state minimum wage and overtime laws. This means they MUST receive a time-and-a-half premium for all the work they perform beyond 40 hours each week.

The purpose of the FLSA is to protect blue-collar laborers from overworking and to spread employment around to more employees. Thus, non-exempt, hourly employees who work more than forty hours per week are legally entitled to 1.5 times their regular rate of pay for all overtime hours.

Unpaid Overtime: The Biggest Obstacle for Non-Exempt Workers

We can’t have a complete discussion of the differences between exempt and non-exempt without emphasizing the unpaid overtime issue. It’s one of the biggest sources of conflict and wage claims in American business.

In every location, it’s federal law that employers have to pay 1.5 times the regular pay rate once an employee reaches 40 hours. In many states, like California, Nevada, or Massachusetts, there are additional minimum wage and overtime requirements. Your employment lawyer will review any applicable state minimum wage and overtime laws which apply to your claim to maximize your recovery of unpaid wages.

Rowdy Meeks Legal Group LLC Helps Non-Exempt Employees Recover Unpaid Overtime

Rowdy Meeks Legal Group LLC is here to help if you believe you’ve experienced the problems we’ve mentioned in this article. We represent employees throughout the United States in pay disputes including unpaid minimum wage and overtime cases.

Both exempt and non-exempt employees are welcome to contact Rowdy Meeks Legal Group LLC anytime regarding any unpaid wages questions or issues.