What is the difference between salaried and exempt employees

As an employer, you've probably heard about exempt and non-exempt employees at least once. That's because all employees fall into one of these two categories. Exempt or Non-Exempt? Our guide breaks down exempt and non-exempt employees. Thanks for downloading!

If the requested file does not load in a new window, click here. In , the U. The term commonly refers to exemptions for executive, administrative, professional, outside sales, and computer professional employees. In general, an employee must meet certain tests to qualify as exempt from minimum wage and overtime pay:. For certain exemptions an employee must be paid a fixed salary. Be sure to check applicable state law as the salary basis requirements may vary.

The job duties tests have many detailed components that are specific to each white collar exemption. Many of the exemptions require that the employee have management authority or regularly exercise discretion and independent judgment in performing her job duties.

Some states have different duties requirements than those under the FLSA, so make sure to check the specific requirements for any location where you have employees. Generally speaking, an exempt employee must be paid the same amount for any week in which the employee performs any work, regardless of the number of days or hours worked.

Non-exempt employees must receive at least the minimum wage for all hours worked and are entitled to overtime pay. Generally, employees are considered non-exempt unless an exemption applies. Although non-exempt employees typically receive hourly pay, employers can pay them on a salary basis and pay applicable overtime.

Under federal law, when a non-exempt employee works more than 40 hours in a workweek, overtime must be paid at 1. For example, if an employee worked 60 hours during a workweek, they would receive their regular rate of pay for 40 hours, plus an additional 20 hours at the overtime rate.

Some states have more stringent overtime requirements than the FLSA e. Some states use their own salary and duties tests for classifying whether an employee is exempt and non-exempt from overtime. California, like many states, has its own minimum wage requirements that employers must meet.

California localities also have their own minimum wage and salary requirements. Your Practice. Popular Courses. Part Of. Agencies and Entities. Employment and Pay. Unemployment Protections.

Health and Safety. Unions and Right to Work. Table of Contents Expand. What Is an Exempt Employee? Understanding Exempt Employees. Exempt vs. Nonexempt Employees. Pros and Cons. Exempt Employee FAQs. Key Takeaways An exempt employee is an employee who does not receive overtime pay or qualify for minimum wage.

Exempt employees are paid a salary rather than by the hour, and their work is executive or professional in nature. Exempt employees stand in contrast to nonexempt employees, who must be paid at least the minimum wage—and overtime when they work more than the standard hour workweek. The FLSA includes these job categories as exempt: professional, administrative, executive, outside sales, and computer-related. Article Sources. Investopedia requires writers to use primary sources to support their work.

These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear.

Investopedia does not include all offers available in the marketplace. Payroll Payroll is the compensation a business must pay to its employees for a set period or on a given date. Read about payroll accounting here. Base Pay Base pay is an employee's initial rate of compensation, excluding extra lump sum compensation or increases in the rate of pay. Others prefer the latitude that comes with salaried positions. For example, most nonexempt employees are going to be held to a more stringent standard regarding things like casual time.

Exempt employees can ordinarily spend a reasonable amount of time around the watercooler without incurring the boss's wrath; nonexempt employees' time tends be more closely monitored, and designated breaks are allowed only at certain times during the workday. Generally, exempt employees are paid more than nonexempt employees, because they are expected to complete tasks regardless of the hours required to do them. If staying late or coming in early is required to do the job, exempt employees are frequently expected to do just that.

Nonexempt employees typically work only the prescribed number of hours. This article is intended to be a primer on this issue, but HR laws and regulations can be enormously complex. For more information, visit the Department of Labor's Web page that addresses these issues. There's a lot to know when you're a member of the workforce. The more informed you are, the better off you'll be, both now and in the future.

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