Difference between exempt and non-exempt employees:

Non-exempt employees are covered by the Fair Labor Standards Act (FLSA). The Act sets out the status requirements for employees. Status is dependent on what kinds of duty the employee performs in the course of his or her job. Non-exempt employees are entitled to overtime payment if they work longer than a 40-hour week.

For executives to be exempt:
• Their primary duty must be managerial (80 % of their tasks should be managerial; 60 % in retail and services).
• They have to manage the work of two or more full-time employees.
• They frequently exercise independent judgment.
• They have authority to hire and fire employees.

For administrators to be exempt:
• Their primary duty is office based or non-manual.
• They assist a proprietor or executive and perform specialized technical work or special assignments.
• They frequently exercise independent judgment and discretion.
• No more than 20 % of their time is devoted to non-administrative functions; 40 % in retail and services.

For professionals to be exempt:
• They do original and creative work in fields requiring specialist knowledge.
• They frequently exercise independent judgment and discretion.
• Their work requires intellectual acumen and flexibility.
• No less than 80 % of their time is devoted to professional matters.

For outside sales people to be exempt:
• They must be take orders away from the employer`s business and do not devote more than 20 % of their time to non-sales activities.