An important detail that you’ll want to ask your employer before you take on a new job is whether or not your role is classified as exempt or nonexempt. These terms can be confusing, yet it is important to understand the distinction between them, since that determines whether or not you are eligible to receive overtime pay — a point you may consider before accepting or declining a job offer.
Read on to understand whether you are an exempt vs. nonexempt employee, see what each term means and learn about some key differences between these legal classifications.
The Fair Labor Standards Act is federal legislation that defines standards for overtime pay. The U.S. Department of Labor notes that some employees are exempt from the overtime pay provisions of the Fair Labor Standards Act. In other words, if you are an exempt employee, then your role is not eligible to receive overtime pay even if you work more than 40 hours a week.
The FLSA requires overtime pay to be at least 1.5 times an employee’s regular pay rate after 40 hours of work in a workweek, the DOL states. If your position is classified as nonexempt, then you are eligible to receive overtime pay when you work more than 40 hours in a single workweek.
Key Differences Between Exempt vs. Nonexempt Employees
If it’s still unclear how exempt and nonexempt employees differ, consult the list below to examine some of the biggest distinctions between the two.
— The primary difference between exempt and nonexempt employees relates to employment status. Stated simply, if you’re exempt, then you’re not entitled to receive any compensation for overtime hours that you work; nonexempt employees, on the other hand, are entitled to receive overtime pay.
— If you’re an exempt employee, it’s at your employer’s discretion whether or not you will receive pay for any hours worked beyond 40 hours a week. If you’re nonexempt, then your employer is required by law to provide you with overtime pay.
— Exempt employees usually receive their pay as salary. Nonexempt employees might receive hourly pay or salary plus overtime pay.
— According to the DOL, exempt employees must perform duties that can be categorized as executive, administrative or professional, such as managers, vice presidents or presidents. Typical positions for nonexempt employees include service, technical, maintenance, clerical and paraprofessional roles.
— According to Chamberlain, Kaufman and Jones, a law firm that focuses on FLSA disputes and publishes the FLSA Home Page, if you earn more than $100,000 a year, you are “almost certainly” exempt. In January 2020, the exact annual salary threshold was increased to $107,432 a year. If you earn less than $35,568 per year, or $684 per week, you are nonexempt.
— To be classified as exempt rather than nonexempt, you must also perform “exempt job duties” in the categories of executive, professional or administrative roles. For example, exempt executive job duties include regular supervision of two or more employees, plus having management as the primary role and having influence over other employees’ job status, such as assigning them work and hiring or firing.
— Exempt employees have “virtually no rights at all” under the FLSA overtime rules, according to the FLSA Home Page. The FLSA does not limit how many hours of work an employer may require from exempt employees even though they are not paid for work completed beyond 40 hours a week. Nonexempt employees do have rights under the FLSA, and are entitled to 1.5 times their regular pay rate for each hour beyond a 40-hour workweek.
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