What is the Difference Between Exempt and Non-Exempt Employment?

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If you own a business or are involved in human resources compensation, you must understand the difference between exempt and non-exempte employment. An employee’s pay depends upon under which of these designations his job falls. The federal government regulates job compensation through the Federal Fair Labor Standards Act, and employees who are not treated in accordance with the standards set forth in the act can file claims against their employers with the US Department of Labor.

What are the Standards?

The law is detailed, but in general it deals with minimum wage amounts and overtime pay. The minimum wage as set forth by the federal government is $7.25 per hour. States, however, set their own rates as long as they meet or exceed this standard. Currently, the District of Columbia pays the highest minimum wage of $10.50 per hour. If a non-exempt employee works more than 40 hours a week, he is entitled to overtime pay, which is time-and-a-half of his regular hourly wage. FindLaw.com notes that some jobs like truck drivers, some agricultural and other jobs are not classified under this law because their wages are regulated under different acts. Some outside sales staff and airline employees are not covered under this act either, but most workers in the United States are classified as either exempt or non-exempt.

Non-Exempt Workers

These workers represent the majority of the wage earners in the US and are usually paid by the hour. They clock in, or adhere to some other method of recording work hours, and they are paid for all time spent on or off the clock. The FSLA does not limit the number of days a worker puts in per week, or the number of hours he works a day unless the worker is sixteen years old or younger, according to the website Paychex.com.

Exempt Workers

To be classified as an exempt worker, an employee must meet three tests. First, the employee must earn at least $455 per week or $23,600 per year. Second, these workers are salaried, not hourly. Third, the employee’s job description must meet certain standards. As an executive exempt employee,

• He must regularly supervise two or more employees.
• His job must be primarily management.
• He must have input into other employees’ status of employment as in hiring or making assignments.

As a professional exempt employee, he must be in a position that requires advanced training such as lawyers, teachers, doctors, architects, registered nurses and others. This does not include skilled trades such as welding or mechanics, but does include musicians, artists, journalists, actors and others.

An administrative exempt employee is one whose duties are non-manual and related to management but at a higher level than clerical workers. These positions usually involve exercising some independent judgement over important issues. Exempt workers may receive their full salary each pay period regardless of actual hours worked or the quality or quantity of their work. They spend less time in the office than non-exempt employees, sometimes not working in an office at all.

The standards set by the FLSA are definitive in terms of non-exempt workers, but some of the job definitions for exempt workers are subjective, and the Department of Labor would address these on a case-by-case basis if there was a dispute. The consequence of not adhering to the standards is that the employee may recover his back wages along with damages equal to the back pay. It is vital for every small business person or compensation human resources manager to know the Difference Between Exempt and Non-Exempt Employment.

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