The terms exempt and nonexempt are likely familiar to you – whether you’ve seen them on job postings or worked in payroll or human resources. Under the Fair Labor Standards Act (FSLA), an employee must be classified as one or the other. So, what’s the difference? Non-exempt :These type of employees are covered by FLSA rules and regulations. A non-exempt employee must be paid minimum wage and granted overtime pay if he or she works past 40 hours a week. This equates to one and one half their regular pay. Technically speaking, these employees receive more protection than their exempt counterparts, but most businesses treat all employees similarly. Most non-exempt workers are hourly, but there are non-exempt salaried employees as well.
Exempt: Exempt employees are essentially paid for their work or “mind.” Their hours consist of whatever it takes to complete their assigned job; thus, they are not given overtime. They earn a salary, rather than an hourly wage, and generally are higher level positions.Other Differences: Non-exempt employees’ hours are often more closely watched – as they’re being paid for the time it takes them to complete their job. They frequently only work a prescribed number of hours, while exempt employees can be asked to come in early or stay later. However, this is a company by company case. In terms of tax liability, there is no difference because everything is still based on earned income. Both types are also protected by the Family and Medical Leave Act.Want more? Be sure to Visit insights here!