Exempt vs Non-Exempt Employee

The Fair Labor Standards Act (FLSA) requires employers to group their workers into exempt and non-exempt employees. This classification depends on the pay and the type of work they perform.

Exempt Employees

Exempt employees are exempt from overtime requirements and not protected under the FLSA. An exempt employee must meet the following requirements:

  • Earn a minimum annual income of $455/week ($23,660/year)
  • Be paid on a salary basis rather than an hourly wage
  • Perform exempt job duties

Employees generally must also meet certain employment tests regarding their salary, job duties, and responsibilities to qualify for exemption from overtime.

Common exempt job duties are found in positions such as the following:


Their job duties involve mainly managing and supervising two or more other employees. This is usually the one in charge, considered the boss, responsible for the hiring, firing, and assigning tasks.


This group includes physicians, architects, registered nurses, lawyers, teachers, and other employees whose work demands advanced education or training. These jobs must use discretion or judgment. This class also includes creative professionals such as actors, musicians, journalists, and writers. Likewise, computer professionals and outside sales professionals may be considered for exemption.


These jobs are human resource staff, public relations, or payroll and accounting. The main aspect of these jobs uses the practice of an independent judgment and discretion about important matters.

Identifying most professionally exempt employees is normally not difficult or controversial, but this is not always the case with administrative positions. For example, a secretarial position often involves performing administrative tasks, but their jobs are not usually exempt. As a general rule, administrative employees are at a higher level than those performing basic clerical work. Their responsibilities include working directly with management and they are involved with general business operations.

An employee who is not categorized correctly must first fix the issue directly with the employer as it could just be a mistake, but if rights are violated it is highly advised to get a free legal evaluation from a local employment law attorney.

Exempt employees are required to have more flexibility in their schedules to come and go as needed to complete their work than non-exempt employees. The bonus for an employer of grouping employees as exempt is that you don't have to worry about tracking their hours or paying them overtime, despite how many hours they work.

Non-Exempt Employees

Non-exempt employees receive more protection under federal law than exempt employees. Under the Fair Labor Standards Act, non-exempt employees are entitled to overtime pay. Overtime pay is one and a half times the regular rate of pay if the employee works more than 40 hours in a week. Non-exempt employees must meet the following requirements:

  • Earn less than $23,600 per year ($455 per week).
  • A non-exempt employee usually receives hourly pay. On some occasions, employers can pay them on a salary basis with relative over time applied.

Non-exempt job positions normally include those working in customer service, pharmacist assistants, production workers, skilled trades, clerical and technical, service, maintenance, and others. Employees in these jobs are often required to explain procedures, apply policy, and are supervised. They often need good interpersonal skills as they deal directly with the public.

Some workers prefer to be employed in non-exempt positions to guarantee they're paid for every hour they work. Others prefer the leeway involved in salaried positions.

The biggest error most employers make with non-exempt employees is not accurately calculating how much overtime workers are owed.

Who Is Taxed?

Despite the different tax brackets we fall under based on our income, there is no difference in how exempt and non-exempt employees are taxed. For both categories of workers all pay is earned money, and therefore taxable to the worker based upon tax bracket.

What Does the Federal Overtime Rule Propose?

The Federal Overtime Rule proposes that the salary starting point for employees qualifying to be exempt be brought up to date every three years, beginning January 1, 2020, based on how wages grow. The rule was temporarily blocked and an ongoing order is still being determined.

Issues that are part of the discussion are the following:

  • Time off for exempt employees
  • Child labor
  • Breaks

If you need help with exempt and non-exempt employees, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.