In an office, there are two types of employees “exempt” and “non-exempt.” The basic difference between the two is judged on overtime pay. Exempt employees do not get an overtime pay for the extra hours they put in, while Non-Exempt employees receive overtime pay for additional work. The Fair Labor Standard Act (FLSA) sets the rules for the two types of employees and protects their rights in this matter. The FLSA is the instrumental force behind this classification. It is mandatory that a company abides by both the state and national laws of their country to avoid any legal complications. It is to be noted that there are differences in certain laws for both the types in different countries, although the basic meaning remains the same.
According to the FLSA, certain types of employees (exempt) are to receive only the minimum wage for up to 40 hours in a week. Therefore, exempt employees are paid on the basis of their work. There are categories of exempt employees and each has their own set of specifications. The categories are:
It is tricky for employers to categorize employees as exempt because they have to justify their cause. But, being an exempt employee, one will be paid a salary on the basis of his/her work. They don’t have to be worried about what will happen if the hours they work drop drastically. To be considered an exempt employee, FLSA maintains that the employer must give an annual salary of $23,600.
Most of the employees who are paid for their overtime work are considered non-exempt according to the FLSA. The biggest problem regarding them is the miscalculation of the overtime pay. The FLSA rules that employers must pay one-and-a-half times the normal rate of pay, additionally, if the employee works more than 40 hours a week. Also, the employee must be earning less than $455 per week, which qualifies them for the overtime pay. Therefore, a non-exempt employee earns additional to his minimum wage according to the hours he/she has put in. The biggest benefit is that they can make a large amount of money by their hard work.
Standards for Exemption of Overtime Pay
Additional to the categories of exempt employees, salesperson and STEM (Science, Technology, Engineering, and Math) employees are also exempt from overtime pay if they meet the following requirements:
- Paid a salary and not on an hourly basis
- Earn a minimum of $455 a week
- Paid the salary for any week they have worked.
The distinction between both the types of employees is based on money and time. Both get equal opportunities to prove themselves. Both have their pros and cons. This is why belonging to any category is not a humiliation, but a chance to do good work and excel.