What Is an Exempt Employee? Here’s What You Should Know

Employees are often classified as either exempt or non-exempt. Both types of employees work for businesses. Exempt and non-exempt employees, however, aren’t the same. If you’re planning to hire one or more employees in the near future, you might be wondering whether they are considered exempt or non-exempt. This post explains the meaning of exempt employees and how they differ from their non-exempt counterparts.

Overview of Exempt Employees

Exempt employees are hired workers who don’t qualify for minimum wage or overtime pay. Under the Fair Labor Standards Act (FLSA), most employees are eligible for minimum wage and overtime pay. You’ll have to pay them a minimum wage set, and if they work for more than 40 hours in a given week, you’ll have to pay them overtime. There are exceptions, though. Employees who don’t qualify for minimum wage and overtime pay are considered exempt.

Exempt vs Non-Exempt Employees

As you may have guessed, the main difference between exempt and non-exempt employees is that the former don’t qualify for minimum wage or overtime pay, whereas the latter do qualify for minimum wage and overtime pay.

Exempt employees aren’t the same as independent contractors. Independent contractors are freelancers. Like exempt employees, independent contracts don’t qualify for minimum wage or overtime pay. Independent contractors, though, are paid on demand. Businesses usually pay them based on how much work they complete. At the same time, independent contractors don’t follow a schedule when performing work. They can choose when to work and what jobs or tasks they wish to complete. In comparison, exempt employees are paid a salary and, in most cases, they follow a schedule.

Requirements for Exempt Employees

Not all employees can be classified as exempt. Rather, there are specific requirements regarding this classification. Exempt employees, for instance, must be paid a salary. If you pay an employee an hourly wage, he or she will be classified as a non-exempt employee. Only employees who are paid a salary are eligible for the non-exempt classification.

The FLSA also lists categories for exempt employees. For an employee to be classified as exempt, he or she must typically work in a particular profession. Some of the eligible professions for exempt employees include executive, administrative, computer-related and outside sales. Only employees who work in one of these categories can be classified as exempt.

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