The Difference Between Exempt, Non-Exempt Employees

Understanding How the FLSA Affects Employees

The Fair Labor Standards Act (FLSA) was created to provide standards of fairness for workers’ hours and wages. This occurred on the heels of the Great Depression, when job conditions were difficult and employees often worked unreasonable schedules for very little pay.

FLSA oversight is handled through the United States Department of Labor. The Wage and Hour Division is responsible for enforcing elements of the act, including issues such as overtime, the federal minimum wage and child labor compliance. The act has been amended numerous times since it was implemented, often to increase the federal minimum wage.

Indeed, one of the most important facets of the FLSA is the establishment of a minimum wage. It assures non-exempt workers get a fair and defined rate of pay. The act also provides for overtime, establishing that an employee must be paid at a higher rate for working more than 40 hours in a defined work week. The act also covers restrictions related to the employment hours of children.

Employers Not Covered by the FLSA

In order for the FLSA to cover a company, that company must have annual sales of at least $500,000 and participate in interstate commerce. A company can be exempt from the FLSA if it falls outside of the parameters of the act. Small farms, for example, are typically exempt from the FLSA as they use little outside paid labor. Even if a company is covered by the FLSA, an employee may still be exempt.

Non-Exempt Under the FLSA

A non-exempt employee is covered by the act and has access to its defined protections in terms of wages and overtime hours. Although there are exceptions, a person who works at a defined wage on a per-hour basis is typically considered to be a non-exempt employee for the purposes of the act.

Exempt Employees

In order to be exempt from the overtime requirements included in the FLSA, employees generally must be paid by salary and must be paid at least a set amount per year as set forth in the act. As of early 2016, the amount was $23,600. This figure is subject to upward adjustment by the U.S. Department of Labor. In addition, the duties they perform must also be exempt under the FLSA. Duties exempt under the FLSA include:

• Executive duties
• Professional duties
• Administrative duties

Executive duties include supervising other employees, management, and having a say in other employees’ job statuses. Professional duties include intellectual jobs involving the use of discretion and requiring specialized education.These duties might include those performed by doctors or even actors and musicians. Administrative duties involve non-manual or office work that involves using discretion and judgment about matters of significance regarding general business management. Examples may include work regarding payroll or human resources.

Some of the most common examples of exempt employees include lawyers, managers, administrators, flight attendants and other highly paid employees. Sales personnel are often exempted from the act because of their payment through commissions. Seasonal workers, those who perform child care activities, and apprentices are also typically exempt. Those who are classified as independent contractors are also often excluded from FLSA protections.

Exempt Employee Rights

Under the FLSA, employees who are exempt have the right to receive the full amount of their base salary at any time they perform work. The employee is not, however, entitled to overtime, and mandatory overtime is not mandated by the FLSA. Employers can also require that exempt employees make up for time that they are absent.