The Federal Fair Labor Standards Act, or FLSA, requires that all employers allocate positions within their organizations to be either exempt or non-exempt. A non-exempt employee is covered under the rules and policies of the FLSA; however, those regulations do not apply to exempt employees. Non-exempt employees are entitled to overtime pay and the set of laws surrounding all minimum wage regulations, while exempt employees are not promised any additional pay if they work overtime -- nor are they guaranteed minimum wage.
Classification of Exempt
An exempt employee, commonly referred to as a salaried employee, receives a set amount of pay each pay period in which he works. Most exempt employees receive a base pay that is calculated by dividing the number of paydays in a year into his annual salary. In this instance, "hourly pay" is not relevant, as an employee will generally collect the same compensation whether he works 10 hours or 80. Exempt employees receive a base pay regardless of deducted absence from work, and will not receive less pay based on how much they work or the quality of the work.
Employment duties performed by an exempt employee must fall under the exempt job duties category. The job title that an employee holds is not relevant in terms of whether or not a job is considered "exempt." Executive, professional and administrative are three of the most common types of exempt job categories.
Types of Exempt Employees
According to the FSLA, an executive exempt position is one where an individual manages two full-time employees, or part-time employees whose hours combined equal full-time status. For example, two part-time employees would equal one full-time employee. Executive exempt positions must also have the authority to hire, fire and assign work to the employees. Exempt executive professionals determine how much an employee will be paid, are in charge of training and handle disciplinary actions within their departments.
Exempt professional positions include doctors, lawyers and teachers. Many exempt professional positions are those that have been "learned" by attending college and beyond; for example, an engineer, nurse and or accountant may be considered exempt. Actors, musicians and writers may also be categorized as exempt professionals, due to the creative aspect of the job, which requires heavy use of originality and or talent.
Administrative exempt positions are high-level office jobs that are instrumental in the success or failure of a business. An example of this would be an executive assistant, who may be the go-to person for a CEO or office manager. Exempt administrators are directly involved with the management and operations of a company and its affiliates.
Classification of Non-Exempt
Non-exempt employees are referred to as "hourly" employees because they receive compensation based on the number of hours they work. Non-exempt employees are required by law to receive at least minimum wage and are eligible for overtime pay, should they work past 40 hours a week. If an exempt employee works more than 40 hours a week, she is obligated to receive one and one-half times what her normal hourly rate would be for each hour over 40 worked. For example, if an employee is non-exempt and earns $10 an hour as her rate of pay and works 42 hours in a one-week pay period, she will receive two hours of pay at a rate of $15 an hour.
Types of Non-Exempt Employees
Most entry-level and unskilled jobs will be classified under non-exempt status, such as a janitor, food service worker, clerical assistant and construction worker. While a non-exempt employee may have a college degree, the job duties that are held by the individual decide if he will be considered non-exempt. For instance, a person may have a bachelor's degree in nursing; however, if he is not in a supervisory role and spends the majority of the work week as a phlebotomist, then he will not be considered exempt due to the nature of his work.
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