Exempt vs. Non Exempt

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Difference between Exempt and Non Exempt

The Fair Labor Standards Act published in 1938 regulates working relations between employees and their employers. It is a United States federal law also known as the “Wages and Hours Bill” law. Its effects apply to employees performing interstate commerce or employed by a company performing commerce activities or producing goods for commerce. Its purposes are to establish a minimum wage basis, to guarantee payment for overtime under certain conditions and also to prohibit child labor. The law was amended over the years to suit modern work conditions and to better protect employees’ rights in such a context. The law states the attributes of exempt and non-exempt employees.

Exempt
Non Exempt

Frequency of Payment

Employees are exempt from overtime payment if they receive full salary for a week of work no matter how much time they spend in the office. To avoid any abuse though job duties should be clearly stated in the working contract so that employees are not requested to do tasks which require extra time and actually do not fit the job description. Non-exempt employees from overtime payment are paid on an hourly basis. Therefore any time spent additionally has to be properly remunerated. Non-exempt employees must account for the hours surpassing the normal working week as they do for normal hours as well.

Minimum Salary Paid

Exempt employees are usually paid more than $455 per week and this is another criterion which qualifies them to be classified as such. Non-exempt employees are generally paid less than $455 for their weekly work and this entitles them to have guaranteed overtime pay. They are to be paid one time and a half more than the normal hourly rate as per the Fair Labor Standards Act.

Categories

Executive, administrative and professional employees (computer professionals included) are considered exempt employees. Non-professionals are classified as non-exempt employees and their work is subject to over time payment. Emergency personnel such as police officers, firefighters and paramedics are also non-exempt employees by the nature of their work. Some reclassification projects took place over the years to provide the current structure. Team leaders for instance were priory classified as non-exempt employees, but now they are considered exempt employees as they hold an executive function and earn more than $23,660 a year which the law prescribes as a benchmark. Aside from categories mentioned above there are special regulations to be consulted as each holds its particular conditions which are thoroughly investigated on the U.S. Department of Labor website.

Summary

  • Exempt employees are paid on a weekly or more extended basis, while non-exempt employees receive payments on an hourly basis.
  • An exempt employee’s yearly salary is more than $23,660, while a non-exempt employee’s wage is less. Non-exempted employees are guaranteed to receive overtime pay which is one time and a half more than the normal hourly rate.
  • Executive, administrators are exempt employees, while non-professionals and emergency personnel are non-exempt employees.

Which status is most desirable?
  • Exempt
  • Non Exempt
 
 

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