The designation of FLSA exempt or non-exempt is a legal designation and does not impact the type or importance of an employee’s work. FLSA status is based on the job description on file for each position and determines eligibility for overtime pay and how time worked is reported.
FLSA Non-Exempt:
A FLSA “non‐exempt” employee is paid based on actual hours worked, required to track all time worked, and entitled to overtime pay in accordance with the FLSA. Employers are required to pay time and one half of a non-exempt employee’s regular rate of pay, or give the equivalent in compensatory time off, when time worked is in excess of 40 hours in a workweek. An employee is classified as non-exempt when they do not meet the necessary exemptions from the provisions of the FLSA.
FLSA Exempt:
A FLSA “exempt” employee is exempt from the provisions of the FLSA. An exempt employee is paid on a salary basis (a predetermined amount of money for work performed, regardless of the hours actually worked) and is not required to track time worked. An exempt employee does not earn overtime or compensatory time when they work more than 40 hours in a workweek. The DOL has defined a number of exemptions; but most commonly employees are assessed under the executive, administrative, and professional exemptions. For an employee to be classified as exempt, he/she must meet the following three tests:
- Salary Basis Test: An employee must receive a predetermined, fixed salary that is not subject to reduction due to variations in quality or quantity of work performed;
- Minimum Salary Test: An employee must be paid a salary minimum that is currently at least $455 per week ($23,660 per year); and
- Duties Test: An employee must qualify as an executive, administrative, professional, or computer professional (as specifically defined by the FLSA) based on an analysis of the position’s job duties.
Note:
- $455 per week is the current minimum and could be revised by the federal government. Many organizations are expecting changes to the FLSA within the next several years, but it is not yet known at this time what those changes may be or when they may become effective.
- Not all of the duties tests need to be satisfied for an employee to be classified exempt. An exempt employee must be paid a salary above the threshold of $23,660 and meet at least one of the exemptions in the standard duties test.