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

The primary distinction between exempt and non-exempt employees is whether the employee is paid at least the minimum wage and is eligible for overtime pay. Typically, exempt employees receive salaries while most non-exempt employees earn hourly wages. Non-exempt employees generally perform supervised routine tasks or manual labor that doesn't require decision-making authority.

How does overtime work for non-exempt employees?

Any hours worked in excess of 40 hours in a single workweek must be paid at 1.5 times an employee's regular hourly rate. This applies regardless of whether the added hours are scheduled or not.

How should employers track non-exempt employee time?

Employers must keep detailed wage records for at least three years. This includes reporting exact start and end times, regular hours, overtime, and break periods for non-exempt employees each workday. Accurate time tracking records protect the business and employees during wage disputes or audits.

What happens if employers misclassify non-exempt employees?

Incorrect classification can result in specific penalties, including back payment for unpaid overtime, additional damages equal to the unpaid overtime amount, and legal fees. The Department of Labor can also fine employers for each instance of noncompliance.

How do state laws affect non-exempt status?

States such as Alaska, California, Colorado, and Nevada have overtime requirements that differ from federal law. Some states require overtime pay for work exceeding eight hours in a single day, regardless of the total weekly hours worked. Other states require higher minimum wages or different overtime calculations. Employers must follow the rules that provide the most benefits to employees, whether federal or state requirement.