An employee of non-exempt status is entitled to minimum wage and overtime pay protections outlined in the Fair Labor Standards Act (FLSA). Unlike exempt employees, non-exempt employees must receive overtime pay – at a rate of one and a half times their regular pay – for all hours worked beyond 40 hours in a single workweek.

What is FLSA?

The Fair Labor Standards Act (FLSA) is a US employment law, enforced by the Department of Labor (DOL), that governs wage practices and working conditions. Private employers and government entities of all sizes and industries must remain compliant with the FLSA to avoid significant fees and damaging lawsuits. 

Initially, the FLSA established basic employment standards, such as minimum wage rates, overtime pay, and youth labor regulations. However, it later expanded to make accurate employee classification (in this case, non-exempt or exempt employees) essential.

What Classifies As A Non-Exempt Employee?

The most common non-exempt employees work in retail, customer service, warehouse, and hospitality roles. 

However, the FLSA and DOL have three main factors that employers can use to determine whether an employee falls under the non-exempt status. These factors are: 

  • Job duties: It’s essential to consider the job duties, not the job title. Non-exempt employees often perform routine or manual tasks under direct supervision. They don’t hold executive, administrative, or professional (EAP) roles.
  • Salary basis: If an employee receives an hourly wage, they’re most likely to be of non-exempt status. However, some non-exempt employees can receive an annual salary, but the employer must ensure that their salary covers the minimum wage for all hours worked.
  • Salary level: A non-exempt employee must earn less than $1,128 per week or $58,656 per year, but the same as or more than the federal or applicable state minimum wage for their location.

Employee misclassification can have serious consequences for employers, including back wages for unpaid overtime, penalties and fines imposed by the DOL, and lawsuits for wage violations.

How Do State Laws Affect Non-Exempt Employees?

States such as Alaska, California, Colorado, and Nevada have overtime requirements that differ from federal law. Some require overtime pay for work exceeding eight hours in a single day, regardless of the total weekly hours worked. 

Employers must follow the laws that provide the most benefits to their employees, whether a federal or state requirement.

Exempt vs Non-Exempt Employees

The key differences between non-exempt and exempt employees include: 

  • Overtime pay: Non-exempt employees will receive overtime pay for any hours worked beyond 40 hours in a single workweek, while exempt employees will not.
  • Minimum wage: Non-exempt employees must receive between the minimum wage and $1,128 per week. In contrast, exempt employees are paid a salary above $58,656 a year. 
  • Working hours: Exempt employees have more control over their working hours and are only required to work as many hours as it takes to fulfill their job duties. This means they often have a better work-life balance.
  • Supervision: Non-exempt employees work under direct supervision. Whilst exempt employees have the authority to hire and fire, and they are usually in charge of a specific department within the company.