Nonexempt Employee

Correctly classifying nonexempt employees is one of the most critical FLSA compliance requirements : misclassification creates significant wage and hour liability.

What is nonexempt employee?

Nonexempt employees are employees who are not exempt from certain labor laws, such as overtime pay and minimum wage laws. These employees are entitled to certain legal protections, such as the right to receive overtime pay for hours worked over 40 in a workweek, and are also protected by anti-discrimination laws. Nonexempt employees are typically hourly workers, as opposed to salaried workers, who are typically considered exempt from these labor laws.

What are the criteria for classifying an employee as exempt?

Exempt employees are those who are not covered by certain labor laws such as overtime pay and minimum wage laws. In order to be classified as exempt, an employee must meet certain criteria. One of the main requirements is that they must be paid a salary instead of an hourly rate. This means that their pay is not based on the number of hours they work, but rather on a set amount that is paid to them on a regular basis, such as weekly or monthly.

Another requirement for exempt employees is that they must receive a monthly basic pay higher than the threshold set by the Fair Labor Standards Act (FLSA). This threshold changes every year, and as of 2020, employees must earn at least $684 or $35,568 per year to be considered exempt. Any employee earning less than this is considered a non-exempt employee and is eligible for overtime pay and other legal protections. HBR’s wage and hour compliance research

In addition to receiving a salary and earning the threshold, the employee must also perform specific job duties that fall under the categories of exempt employees. These include duties such as managing, administrating, executing and professional duties like that of doctors, lawyers, teachers and outside salespeople. Only if they meet all these criteria, they can be classified as exempt employees.

What are the different categories of exempt employees?

The Fair Labor Standards Act (FLSA) recognizes several different categories of exempt employees, including:

1. Executive employees: These are employees who manage the enterprise or a department within the enterprise, and regularly supervise two or more other employees.
2. Administrative employees: These are employees whose primary duties involve non-manual work related to the management or general business operations of the enterprise or its customers.
3. Professional employees: These include employees who work in learned or artistic professions, such as doctors, lawyers, and teachers.
4. Outside sales employees: These are employees whose primary duty is making sales or obtaining orders or contracts for services or for the use of facilities.
5. Computer professional employees: These are employees who are highly skilled in the operation of computers and the application of systems analysis techniques and procedures, who are primarily engaged in the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs.

It’s important to note that not all jobs that fall into these categories are automatically exempt; the specific job duties and salary of the employee are also taken into consideration. SHRM’s nonexempt employee guidance

Correctly classifying nonexempt employees is one of the most critical FLSA compliance requirements : misclassification creates significant wage and hour liability. Using pre-employment assessments alongside a structured hiring plan drives results. Strong talent acquisition focused on skills-based hiring improves outcomes.

Frequently asked questions