Exempt and non-exempt status, what’s the difference?

Nov 23, 2020 | Blog, Payroll Issues

The difference between exempt vs. non-exempt status is easy to identify once you know the differentiating factors. Below we share how to determine a new hires status. 

Exempt employees are paid a salary based on a 40-hour workweek. They do not have to be paid minimum wage, and in most cases, their salaries exceed that wage.

They are paid for the tasks they complete, not how many hours it takes them to do so. Whether it takes them 30 hours or 60 hours a week to complete their work, they are getting paid the same amount every week. With that said, they do not qualify for overtime pay.

  1. To qualify as an exempt employee that person must:
  2. Earn more than $23,500 a year ($455/week).
  3. Have a guaranteed minimum amount that they earn each week, regardless of the quality or quantity of their work.
  4. Possess one of the following status:
    • Executive: This person is a manager, who supervises two or more employees, and has input in other’s job status.
    • Learned professions status: This employee was hired because he/she has extensive knowledge in a specific area within your business, which typically is learned in high education. Examples: a doctor, teacher, lawyer, architect.
    • Executive administration: This employee’s main job is to keep the business operating. Their work is directly related to management and exercising discretion about significant matters. Examples: assistant to the President, office manager, administrative assistant.

Under the FLSA, non-exempt employees do not qualify for overtime. However, you may compensate them in other ways – such as bonuses, extra vacation days, or other benefit increases.

Non-exempt employees must be paid minimum wage and be paid overtime, either based on their gross wages or as blended overtime. Click here for information on NYS minimum wage.

If you’re still unsure if your employee should be considered exempt or non-exempt, visit the FLSA website or give CompassOne a call at (585) 563-1100.

Photo by Kevin Bhagat 

Share This