In the realm of employment law and labor regulations, the terms “exempt” and “non-exempt” hold significant weight. For both employers and employees, understanding the distinction between these statuses is crucial. Whether you’re navigating job offers, determining compensation structures, or ensuring compliance with labor laws, having a clear grasp of exempt vs. non-exempt employee status is essential.

What Does It Mean to Be Exempt?

An exempt employee is someone who is not entitled to overtime pay under the Fair Labor Standards Act (FLSA). These employees are typically paid a salary rather than an hourly wage. Determining whether an employer can be categorized as exempt involves a careful analysis of several factors, including a consideration of job duties and salary level.

Typically, exempt workers must be paid the same salary each pay period to qualify as exempt.  For example, if a salaried employee works 45 hours one week and 30 hours the next week, they will still earn the same weekly salary.  Salaried workers can also be eligible for additional bonuses and commissions, but must be paid their base salary as a minimum.

The FLSA outlines specific criteria that must be met for an employee to be considered exempt. The most common exemptions are for executive, administrative, professional, and outside sales roles. Additionally, certain creative, computer-related, and highly compensated positions may also be exempt.

Exempt employees are generally expected to exercise independent judgment and discretion in their roles. They often have more control over their schedules and may be responsible for supervising other employees or managing significant projects.

Exempt employees must be paid a minimum salary set by federal law.  As of this writing, the minimum salary is $35,368.

Non-Exempt Employee Status

Conversely, non-exempt employees are entitled to overtime pay for any hours worked beyond 40 in a workweek. These employees are typically paid on an hourly basis and must receive at least the federal minimum wage for all hours worked.  However, if they do not work certain regular hours, they do not need to be paid for them (with some exceptions).

Non-exempt employees often perform routine or repetitive tasks and have less autonomy in their roles compared to exempt employees. They may be closely supervised and are typically not involved in managerial or decision-making responsibilities.

However, anyone can be categorized as non-exempt.  There are no criteria that need to be met by the employer in order to classify someone as non-exempt..

Key Differences and Implications

Overtime Pay

Perhaps the most significant distinction between exempt and non-exempt employees is the entitlement to overtime pay. Exempt employees do not receive overtime compensation, whereas non-exempt employees must be paid at a rate of at least one and a half times their regular hourly rate for any overtime hours worked.

Salary vs. Hourly Pay 

As noted above, exempt employees are generally paid a salary, which remains consistent regardless of the number of hours worked. Non-exempt employees are typically paid an hourly wage and receive compensation based on the number of hours they work.

Job Responsibilities

Exempt employees often hold positions of authority or responsibility within an organization, whereas non-exempt employees typically perform more routine or entry-level tasks.

Legal Compliance

Employers must classify employees correctly as exempt or non-exempt to comply with labor laws and avoid potential legal issues. Misclassification can result in penalties, back wages owed, and other consequences for employers.

Importantly, there is no liability to the employee if he or she is misclassified—it is the employer’s responsibility to classify the worker properly, not the employee, and the employer will be liable for the penalties for improper classification.

Do You Believe You’re Being Misclassified?

Understanding the distinction between exempt and non-exempt employee status is essential for both employers and employees. It impacts compensation, job responsibilities, and legal compliance. Employers must accurately classify employees to ensure they are meeting their obligations under labor laws, while employees should be aware of their rights regarding overtime pay and other benefits.

This area of the law is complex and nuanced, and this article is meant to be a non-exhaustive summary of the law.  If you believe you’re being misclassified, Greene and Hafer can provide guidance, assess your situation, and help you pursue legal action if necessary. Located in Boston, Massachusetts, Greene and Hafer represents people who have experienced misclassification. Our attorneys have extensive experience in handling misclassification cases. To schedule an appointment with an experienced lawyer, contact our office.