Non-Exempt Employee
Summary Definition: A worker entitled to Fair Labor Standards Act protections, such as overtime pay and minimum wages.
What is a Non-Exempt Employee?
Non-exempt employees are workers entitled to overtime pay and minimum wages under the Fair Labor Standards Act (FLSA), which guarantees fair compensation protections for all employees. Overtime pay is calculated at one-and-a-half times the employee’s regular rate for hours worked beyond 40 in a workweek.
A non-exempt employee must earn less than $684 weekly (or $35,568 annually) and often perform routine or manual tasks under direct supervision. They don’t, for example, hold executive, administrative, or professional (EAP) roles. However, they must still earn at least the federal or applicable state minimum wage for their location.
Employers must carefully classify employees according to wage thresholds, job duties, and applicable labor laws to ensure FLSA compliance.
What is FLSA?
Established in 1938, the FLSA is a federal law that sets minimum wage, overtime pay, recordkeeping, and youth employment standards for private and public employers. Over time, FLSA amendments expanded worker protections and raised wage standards, making proper employee classification critical for compliance.
Enforced via the Department of Labor’s Wage and Hour Division, FLSA overtime protections primarily apply to workers earning hourly wages. Salary-based roles, however, can be classified as non-exempt so long as the amount involved meets the FLSA’s Salary Level test . In other words, a salaried worker can be a non-exempt employee, meaning they’re also entitled to overtime pay.
Exempt vs. Non-Exempt Employees
An exempt employee is not entitled to (i.e., exempt from) FLSA overtime pay protections due to their level of wages and job duties. An exempt worker, for instance, usually exercises independent judgment and decision-making, requires minimal supervision, and may hold authority to supervise others.
Employers struggling to classify workers as exempt vs. non-exempt should rely on the FLSA’s three tests, all of which must be met for a job or role to be exempt. Misclassifying exempt and non-exempt employees can result in expensive penalties and possible lawsuits for unpaid wages and overtime earnings.
To qualify a job as exempt, all the following must be true:
- Salary Level: The worker must earn more than $684 weekly (or $35,568 annually).
- Salary Basis: The worker must receive wages as a fixed, predetermined salary that’s not affected by the work performed.
- Job Duties: The job’s responsibilities must primarily involve executive, administrative, or professional duties, though some exceptions are allowed.
Thus, if an individual earns less than $684 a week, even as a salaried employee, they can be entitled to overtime pay as a non-exempt worker.
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