Non-Exempt Employee

What it means

A non-exempt employee is covered by the Fair Labor Standards Act (FLSA) and is entitled to:
– At least the applicable minimum wage.
– Overtime pay at 1.5× their regular hourly rate for hours worked over 40 in a workweek.

Non-exempt status is determined by a combination of pay level and job duties. The federal salary threshold used in exemption tests is $684 per week ($35,568 per year); employees paid below that level are generally non-exempt, but duties and supervision factors also matter.

Key points

• Non-exempt workers typically (but not always) are paid hourly.
• Overtime applies for hours worked beyond a 40-hour workweek at time-and-one-half.
• Federal minimum wage is $7.25/hour; state or local minimums that are higher take precedence.
• Exemption requires meeting both a salary threshold and specific duties tests (executive, administrative, professional, outside sales, or certain computer roles).
• Employees can be salaried and still be non-exempt (i.e., eligible for overtime).

How classification is determined

Employers use two main considerations:
1. Salary basis and amount — meeting the minimum salary threshold is necessary for some exemptions.
2. Duties and level of independent judgment — exempt categories require specific duties (e.g., managing a department and supervising staff for the executive exemption).

An employee who earns above the salary threshold but is closely supervised and lacks independent managerial or professional duties can still be non-exempt and must receive overtime.

Example

A maintenance worker paid $18/hour:
– Regular pay for 40 hours = 40 × $18 = $720.
– If they work 50 hours, overtime pay = 10 × ($18 × 1.5) = 10 × $27 = $270.
– Total pay for the week = $720 + $270 = $990.

Pros and cons of non-exempt status

Pros:
– Overtime pay compensates long hours.
– Clear recordkeeping and protections under the FLSA.
– Often easier to find entry-level positions.

Cons:
– Hourly or lower-paid jobs may offer less salary growth and fewer employer-provided benefits.
– Must track hours; paid only for recorded hours worked.
– May have less flexibility than exempt, salaried roles.

Common questions

• Is it better to be exempt or non-exempt?
• It depends on priorities. Exempt roles often pay more and include benefits but typically don’t receive overtime. Non-exempt roles pay overtime but may have lower base pay and fewer perks.
• Can a salaried employee be non-exempt?
• Yes. “Salaried, non-exempt” employees receive a salary but are still entitled to overtime when they work over 40 hours a week.
• Who decides classification?
• Employers classify employees, but misclassification can be challenged. If unsure, talk to HR; consider legal counsel if you suspect misclassification.

What to do if you think you’re misclassified

1. Review your pay and duties against exemption criteria (salary level and duties).
2. Discuss concerns with your HR or payroll department.
3. If unresolved, seek advice from a labor attorney or contact the U.S. Department of Labor Wage and Hour Division.

Bottom line

Non-exempt employees are protected by FLSA rules requiring minimum wage and overtime pay for hours over 40 per workweek. Classification depends on both pay and job duties; employers must apply federal and applicable state rules correctly. When in doubt, verify classification with HR or a legal professional.

Source: U.S. Department of Labor (Wage and Hour Division).