What's the difference between exempt and non-exempt employees?

The primary difference between exempt and non-exempt employees is whether the employee qualifies for overtime pay. Exempt employees are salaried, meaning they receive the same amount every pay period, regardless of hours worked. Unlike hourly employees, they don't receive overtime pay.

Exempt employees typically have more management authority or exercise independent judgment while performing job duties, whereas non-exempt employees' job duties require more routine or manual tasks.

What are the exempt employee categories?

The FLSA outlines several categories of employees exempt from minimum wage and overtime requirements. These typically include executive, administrative, and professional employees. Job duties involve managing a business, performing office work directly related to management, or advancing a field of science or learning. There are also exemptions for roles outside sales and in computer science, but different requirements apply in these cases.

How do businesses manage payroll for exempt employees?

Managing payroll for exempt employees primarily involves ensuring that employees are compensated accurately and on time, including making accurate deductions. Employers should be wary of staying in compliance with multi-state labor laws and federal requirements. Maintaining accurate records and staying informed about labor laws can help businesses avoid potential legal issues.

Do employers need to offer benefits to exempt employees?

Federal law requires employers to offer Social Security, Medicare, unemployment insurance, workers’ compensation insurance, and protection under the Family and Medical Leave Act (FMLA), regardless of exemption status. Exempt employees typically also have access to more health insurance plans, generous paid time off, additional retirement plans, and perks.