Exempt vs Non-Exempt Employees
The federal Fair Labor Standards Act (FLSA) requires that in addition to paying at least the minimum wage you also must pay overtime to employees who work more than 40 hours in a given workweek, unless they meet certain exceptions. Most workers are classified as either exempt or non-exempt depending on their salary and they type of work they do.
To complicate matters further, many states have wage and hour laws that may have more requirements than the FLSA. Employers must make sure they abide by both federal and state wage and hours laws to avoid legal trouble.
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Definition of non-exempt employee
Most employees are entitled to overtime pay under the FLSA. They are called non-exempt employees. You must pay them one-and-a-half times their regular rate of pay when they work more than 40 hours in a week. The biggest problem most employers have with nonexempt employees is miscalculating how much overtime workers are owed.
Audit your wage and hour and employee classification policies and practices with the Employment Practices Self-Audit Workbook
Definition of exempt employee
You don't have to pay overtime to employees who are exempt from the FLSA's overtime provisions. The most common exemptions are the white-collar exemptions for administrative, executive, and professional employees, computer professionals, and outside sales employees. There is a also a lesser known exemption for certain retail or service organizations. Many overtime mistakes occur when the employer misclassifies a non-exempt employee as exempt.
Learn more about correctly classifying your workers in the Wage and Hour Compliance Manual
Other classifications of employees
In addition to regular non-exempt employees and exempt employees, there are several other classifications of workers. It's important to make sure that those workers actually meet the requirements for those classifications in the FLSA and your state's wage and hour laws. Other classifications include volunteers, trainees, interns, independent contractors, and temporary employees.
Wage and Hour Virtual Summit: Advanced FLSA Compliance Strategies
Other issues to consider
- Comp time. Although there are exceptions, it's usually illegal to give non-exempt employees comp time (time off) instead of paying them overtime.
- Child labor. Federal and state laws include special provisions to protect workers younger than 18. These laws can affect the type of work, wages, and hours that an employee can work.
- Breaks. Employers need to make sure they follow federal and state law requirements regarding breaks, including meal breaks, for workers.
Evaluate your employee classifications with the Employment Practices Self-Audit Workbook
Wage and hour law enforcement
The provisions of the FLSA are interpreted and enforced by the U.S. Department of Labor which investigates complaints and sometimes sues when it find violations. Many states also have agencies that enforce state labor laws and investigate complaints.
Attend the wage and hour track sessions at the Advanced Employment Issues Symposium
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