What is a non-exempt employee?

A non-exempt employee is a worker who is entitled to minimum wage and overtime pay protections under the Fair Labor Standards Act (FLSA). These employees must receive overtime pay for hours worked beyond 40 in a workweek at a rate of one and a half times their regular pay.

How does the FLSA define non-exempt employees?

The  FLSA defines non-exempt employees as individuals who are entitled to the minimum wage and overtime pay protections. Unlike exempt employees, non-exempt employees must be compensated for overtime work, ensuring they receive fair pay for all hours worked.

What are the overtime rules for non-exempt employees?

Under the FLSA, a non-exempt employee is entitled to overtime pay. This is at an hourly rate of one and a half times their regular hourly pay rate for any hours the employee works beyond a standard, full-time, 40-hour workweek. State laws may have additional overtime provisions that apply, depending on where the employee lives and works.

Can non-exempt employees work more than 40 hours per week?

Yes, non-exempt employees can work more than 40 hours per week, but they must be paid overtime for the additional hours worked.

Can non-exempt employees be required to work more than 40 hours per week?

Employers can require non-exempt employees to work more than 40 hours per week, provided they comply with FLSA overtime pay requirements. Employees must be compensated at the overtime rate for any hours worked beyond the standard 40-hour workweek. While there are no federal limits, some states have labor and employment laws that put a cap on the number of hours an employee can work in a week, or require rest breaks.

What’s the difference between a non-exempt vs exempt employee?

Exempt employees are defined by the Fair Labor Standards Act. They must meet specific criteria related to their job duties (e.g., executive, administrative, or professional employees) and are most often paid on a salary basis, rather than an hourly wage.

The primary differences between non-exempt and exempt employees have to do with their eligibility for overtime pay and minimum wage protections:

• Overtime pay: Non-exempt employees are entitled to overtime pay for hours worked beyond 40 in a workweek, while employees with exempt status are not.
• Minimum wage: Non-exempt employees must receive at least the federal minimum wage (or the applicable state or local minimum wage), while exempt employees are typically paid a salary that meets or exceeds a threshold set by the Department of Labor (DOL).

How can employers determine if a worker should be classified as non-exempt?

The FLSA and DOL have three factors employers can use to determine whether a worker falls under non-exempt or exempt status:

• Job duties test: First, consider their job title and job description. Employees whose primary duties would be considered “white-collar” (e.g. executive or administrative employees, those who perform outside sales, or high-level managers) are often exempt.
• Salary basis: Next, consider how they’re paid. If they receive hourly wages, they’re more likely to be non-exempt. If they’re paid an annual salary, they’re more likely to be exempt.
• Salary level test: Finally, determine whether they meet the minimum salary threshold for a “highly compensated employee” under DOL rules. Currently, the threshold is $684 per week ($35,568 per year). On July 1, 2024, it’s increasing to $844 per week ($43,888 per year). On Jan. 1, 2025, it will increase again, to $1,128 per week ($58,656 per year).

What are the consequences of misclassifying an employee as exempt?

Employee misclassification can have serious consequences for your organization, including:

• Back wages for unpaid overtime
• Penalties and fines imposed by the Department of Labor
• Lawsuits for wage violations, potentially leading to legal costs and settlements or judgments against you as the employer

Frequently asked questions about non-exempt employees

Still have questions about non-exempt employees? Find answers in the FAQs below.

What is the Fair Labor Standards Act?

The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay, recordkeeping, and youth employment standards for employees in the private sector and in federal, state, and local governments. Some limited FLSA exemptions exist, mostly related to minimum wage and overtime rules for certain employees.

How do employers know if their workers are non-exempt or exempt?

The FLSA defines the two, and the DOL leaves it up to employers’ independent judgment. Employers should evaluate their workers’ job duties, salary level, and salary basis against the criteria set forth by the FLSA and consult a legal expert if they still aren’t sure about how to classify their employees.

What are some examples of non-exempt employees?

Some roles that are common for non-exempt jobs and non-exempt workers include:

• Retail sales associates
• Customer service representatives
• Food service workers
• Warehouse workers

However, it can sometimes be easier to answer this question by thinking about examples of roles that are typically exempt, as it’s a much shorter list. Some of those examples include:

• Managers
• Executives
• Professionals that do non-manual work or require advanced knowledge in their fields

Can non-exempt employees be salaried?

While it’s most common for non-exempt workers to be paid on an hourly basis, they can also be salaried employees. However, they are still entitled to overtime pay for hours worked beyond 40 in a workweek. Employers must also ensure that their salary covers the minimum wage for all hours worked.

Are part-time employees exempt or non-exempt?

Part-time employees can be either exempt or non-exempt, depending on their job duties, salary level, and salary basis as defined by the FLSA.

Are independent contractors exempt or non-exempt?

Many small businesses work with independent contractors when they need help with short-term projects or require special skills their own employees don’t possess. Independent contractors are not classified as exempt or non-exempt under the FLSA. They are considered self-employed and are not subject to the same wage and hour regulations as employees.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.