What Is the Definition of a Non-Exempt Employee?

Non-exempt employees are entitled to overtime pay and must earn at least the federal minimum wage under FLSA regulations. Unlike exempt workers, they are typically paid hourly and receive 1.5 times their wage for extra hours.

By Brad Nakase, Attorney

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Table of Contents

1. Who Are Non-Exempt Workers?

2. Gaining Insight into Non-Exempt Workers

3. Characteristics and Requirements of Non-Exempt Workers

4. An Overview of the Fair Labor Standards Act

5. The Benefits and Drawbacks of Non-Exempt Status

6. Jobs That Are Not Exempt

7. How Are Non-Exempt Workers Different from Exempt Workers?

8. Does Being an Exempt or Non-Exempt Employee Have Any Advantages?

9. Is it Possible for an Employee to Receive a Salary While Being Non-Exempt?

10. In Conclusion

Who Are Non-Exempt Workers?

A nonexempt employee is a class of worker according to federal law. The purpose of this categorization has to do with the rights of these employees, as opposed to those labeled exempt.

For each hour worked in excess of a typical 40-hour workweek, non-exempt employees are entitled to overtime pay, which is one and a half times their hourly rate. These workers are also required to receive at least the federal minimum wage. The FLSA, a federal law, is responsible for establishing these rules.

Key Points

The federal government classifies some workers as “non-exempt,” which grants them additional protections.
People who are non-exempt usually get paid by the hour and must be paid 1.5 times their hourly rate for working extra hours.
In most cases, exempt workers receive a salary of at least $35,568 per year, or $684 per week. The requirements might vary by state, but generally speaking, non-exempt employees make less than this amount.
Beginning on January 1, 2020, amendments were made to the Fair Labor Standards Act (FLSA), which lays out the rights of non-exempt employees.

Gaining Insight into Non-Exempt Workers

“Non-exempt” workers are those whose weekly wages are below $684. The employee is considered non-exempt if they are not exempt from overtime pay under the Fair Labor Standards Act (FLSA). On January 1, 2020, the $684 weekly wage, which amounts to $35,568 per year, became effective. It superseded the previous weekly salary of $455.

The following also applies to non-exempt workers:

They report immediately to supervisors who oversee their work.

According to the FLSA, they can’t be “bona fide executive, administrative, professional, or outside sales employees.” Teachers, educational administrative staff, and IT professionals are also exempt.

Workers in industries where physical labor or repetitive tasks are prevalent, such as construction, manufacturing, and maintenance, are examples of non-exempt employees. These workers are also expected to diligently follow orders without expressing their own management decisions.

Consult your HR representative if you have questions about your employment status. If you suspect that your job has been misclassified, you may want to consider hiring an attorney.

Characteristics and Requirements of Non-Exempt Workers

Exempt employees have no legal right to receive overtime pay, even if their workweeks significantly exceed 40 hours. In contrast, non-exempt workers are usually paid an hourly wage. Overtime pay for non-exempt workers is one and a half times their hourly wage for all hours worked in excess of forty hours per week.

An example of a worker who does not meet the exemption criteria under the Fair Labor Standards Act is a maintenance worker who is employed for forty hours per week at $18 per hour. With a typical weekly income of $720, this worker easily passes the salary test and is therefore designated as an exempt worker, since their weekly income is more than the $684 threshold.

However, because this worker is also directly supervised and has little room for independent judgment, they are ultimately considered a non-exempt employee. To illustrate, a 50-hour work week would result in this staffer earning $18 per hour for 40 hours and $27 per hour, or 1.5 times their regular rate, for the 10 extra hours worked.

A non-exempt worker is required to pay at least $7.25 per hour under the Fair Labor Standards Act (FLSA). However, if a state or town has a higher minimum wage than the federal floor, that higher rate will take precedence.

An Overview of the Fair Labor Standards Act

In 1938, the Fair Labor Standards Act established the Wage and Hour Division, whose job it is to manage and enforce the labor rules that apply to the vast majority of private sector and public sector employees.

Although challenged in 1941, the Fair Labor Standards Act was ultimately upheld by the US Supreme Court. Since its inception, the FLSA has seen a steady increase in employment laws, with the minimum wage rising from $0.75/hour to $7.25/hour, overtime pay, allowable hours worked, pay recordkeeping, and child labor regulations all covered.

Keep in mind

Approved changes to the Fair Labor Standards Act (FLSA) will take effect on January 1, 2020, following the most recent revisions made in September 2019.

The Benefits and Drawbacks of Non-Exempt Status

A person’s work-life balance priorities will determine whether being an exempt or non-exempt employee is better for them. The main perk of being a non-exempt employee is the possibility of receiving overtime pay, though it might be less than what salaried exempt workers get.

Contrarily, an exempt worker might be allowed to skimp on some hours here and there while still collecting their full wages. On the other hand, non-exempt employees are often better protected than exempt employees under labor laws like the Fair Labor Standards Act (FLSA).

Full payment is due to exempt employees each and every workweek regardless of whether they are required to work remotely or under different arrangements due to an emergency.

However, non-exempt employees are not entitled to pay in these situations if they are physically unable to do their jobs. In any case, non-exempt employees are required to record their hours worked. For instance, a retail store that is closed or undergoing remodeling on a particular week will not pay non-exempt employees who fold clothes there.

At the same time, exempt retail shop managers may continue to receive compensation for the remote labor they perform in overseeing the operations of their stores.

Government employment benefits are available to both exempt and non-exempt workers. For example, social security benefits are available to both groups upon retirement, and weekly unemployment payments are available to both groups in the event of job loss. However, benefits like paid time off, healthcare coverage, and retirement plans are more commonly received by exempt workers.

The Benefits of Nonexempt Status

Earn a wage that is 1.5 times their regular rate for overtime work.
Jobs are typically for those with little experience or education, so they may have an easier time breaking in.
More often than not, FLSA provisions provide better protection.
May continue to receive government assistance (as exempt workers do)

Downsides of Nonexempt Status

Pay is lower than that of exempt workers since specialized training and expertise are usually not as valued.
Could face challenges in advancing one’s career as a result of the position’s requirements.
Will not be paid when not physically present

Jobs That Are Not Exempt

Before you commit to a position, find out if it’s exempt or non-exempt. Different roles and companies have different classifications, so it’s usually easier to tell which ones are exempt and which ones are not. Some examples of non-exempt positions are:

Executives are required to oversee the entire business or a specific division within it, supervise a minimum of two full-time employees, and have the authority to make hiring and firing decisions.

To qualify for exemption, administrative jobs must involve office work directly related to a company’s operations.

Professionals are expected to achieve certain financial requirements while also engaging in intellectual pursuits that could necessitate advanced knowledge in a particular scientific or educational domain.

Employees in the computer industry are required to meet certain salary requirements and work as computer programmers, engineers, or in a related field that controls the creation or analysis of computer systems or programs.

Unless otherwise specified, an employee is considered non-exempt if they do not satisfy any of the aforementioned requirements.

How Are Non-Exempt Workers Different from Exempt Workers?

Overtime pay is payable to non-exempt employees but not to exempt employees; this is the main distinction between the two types of workers.

Does Being an Exempt or Non-Exempt Employee Have Any Advantages?

A person’s education, background, and personal situation are among the many factors that determine whether they are better off as an exempt or non-exempt employee. Exempt employees typically receive a higher base salary and a variety of benefits from their employers, including retirement plans and health insurance. However, they do not receive compensation for overtime, so they might not be fairly compensated if their job demands long hours.

Is it Possible for an Employee to Receive a Salary While Being Non-Exempt?

A worker can be “salaried, non-exempt” if they get a weekly salary (or whatever the employer decides to pay) and are eligible for overtime pay if their workweek is longer than 40 hours. Non-exempt workers are not limited to being paid an hourly wage; they can be paid commission, salary, hourly, etc., as long as their pay is at least the federal minimum wage.

In Conclusion

Workers who are classified as “non-exempt” under the Fair Labor Standards Act (FLSA) are required to be paid overtime for any hours worked in excess of the standard 40 hours in a workweek, regardless of whether their primary form of compensation is a salary, an hourly wage, or some other type of payment.

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What Is the Definition of a Non-Exempt Employee?

Who Are Non-Exempt Workers?

Gaining Insight into Non-Exempt Workers

Characteristics and Requirements of Non-Exempt Workers

An Overview of the Fair Labor Standards Act

The Benefits and Drawbacks of Non-Exempt Status

Jobs That Are Not Exempt

How Are Non-Exempt Workers Different from Exempt Workers?

Does Being an Exempt or Non-Exempt Employee Have Any Advantages?

Is it Possible for an Employee to Receive a Salary While Being Non-Exempt?

In Conclusion

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