A non-exempt employee is a worker who is entitled to earn at least the federal minimum wage and qualify for overtime pay, which is calculated as one-and-a-half times their hourly rate for every hour they work above and beyond a standard 40-hour workweek. The Fair Labor Standards Act (FLSA) is a federal law that sets minimum wage and overtime requirements, and non-exempt workers are entitled to certain protections under this law. Non-exempt employees are generally hourly rate employees who must be paid an overtime rate of 1.5 times their hourly rate.
In contrast, exempt employees are not entitled to overtime pay under the FLSA, and they are typically paid a salary above a certain level and work in an administrative, professional, executive, computer, or outside sales role. The Department of Labor (DOL) has a duties test that can help employers determine who meets this exemption criteria.
It is important for employers to classify their employees correctly as exempt or non-exempt, as misclassification can result in costly compliance violations. State and local laws may also provide greater benefits than the FLSA, such as overtime pay for working in excess of eight hours in a day.
