Exempt Employees vs. Nonexempt Employees

The differences between exempt and nonexempt employees can cause a lot of confusion. Entitlement to minimum wage and/or overtime pay for working more than 40 hours per week depends on your exemption status. This status is governed by the federal Fair Labor Standards Act (FLSA).

Some jobs are specifically excluded from the FLSA statute. For example, many types of agricultural workers are excluded, while truck drivers and some other professions are governed by laws other than the FLSA. The majority of U.S. workers, however, are covered by the FLSA and are classified as either nonexempt or exempt employees when it comes to pay and overtime regulations. The following summary breaks down how the exemption rules work.

Nonexempt Employees

A nonexempt employee must be paid minimum wage and overtime pay for any time worked beyond 40 hours in a given week. Under FLSA rules, nonexempt employees are entitled to one and a half times their regular pay rate for each hour of overtime. Nonexempt employees mistakenly treated as exempt employees -- or whose "off-the-clock" hours are not properly recorded and compensated -- may file FLSA overtime claims with the U.S. Department of Labor.

Most workers, particularly those working for an hourly wage, are nonexempt employees.

Exempt Employees

Exempt employees are not granted the protections of the FLSA. As a result, they are not entitled to overtime pay. Some types of jobs are considered exempt by definition under the law, including outside sales staff and airline employees. But for most professions, an individual is an exempt employee if they pass the following three tests:

1. They are paid at least $35,568 per year (or $684 per week),
2. They are paid on a salary basis, and
3. They perform exempt job duties.

The salary requirement does not apply to certain professions that pay on an hourly basis, including physicians and schoolteachers.

Exempt Job Duties

The third test for exemption status concerns the type of work an employee performs. As a rule of thumb, exempt employees tend to perform relatively high-level duties with respect to the company's overall operations, and regardless of job title. The FLSA breaks this out into three main categories: executive, professional, and administrative.

Exempt Job Duties: Executive

An employee is exempt from FLSA rules as an executive, if they regularly perform all of the following:

1. Supervise two or more other employees,
2. Hold a position that is managerial, and
3. Have genuine input into other employees' job statuses, examples of which include hiring, firing, and assignments.

This determination is made on a case-by-case basis, as each duty leaves room for interpretation. As a rule of thumb, an employee working exempt executive duties is "in charge" or considered "the boss."

Exempt Job Duties: Professional

Exempt professional employees include lawyers, physicians, teachers, architects, registered nurses and other employees performing work requiring advanced education or training. These jobs typically require specialized education. This exemption does not include skilled trades, mechanical arts or other work that does not require a college or postgraduate degree.

This exemption also includes creative professionals such as writers, journalists, actors, and musicians.

Exempt Job Duties: Administrative

This exemption is for employees whose main duties involve supporting a business. Examples of such employees include human resource staff, public relations staff, or payroll and accounting staff. Administrative employees do not directly produce what the company sells; however, they tend to occupy higher levels of seniority than workers within basic clerical roles.

The FLSA defines exempt administrative job duties as follows:

• Office or nonmanual work, which is directly related to management or the general business operations of an employer or that employer's customers, and
• The primary component of this work must be the exercise of independent judgment and discretion about matters of significance.

Have Specific Questions About Exempt vs. Nonexempt Employees? Contact a Lawyer

If you work for a company as an exempt employee -- meaning you're not bound by overtime restrictions and other limitations -- it's possible you may have been miscategorized. Your first step should be to resolve the issue directly with your employer, as it could be an honest mistake. However, if you believe your rights have been violated, you should consider speaking with a skilled employment law attorney in your area.