How do exempt and non-exempt classifications work?

Exempt employees receive a salary rather than hourly pay and must earn a minimum wage specified by federal FLSA requirements to qualify. These employees don’t receive overtime pay or minimum wage protections. Non-exempt employees must receive at least the federal minimum wage and overtime pay at 1.5 times their regular rate if they work over 40 hours in a workweek.

What qualifies as an exemption category?

The FLSA recognizes several "white-collar" exemption categories for specific job roles. Executive exemptions cover employees who manage departments and supervise at least two full-time employees. Administrative exemptions apply to office employees who exercise independent judgment in business operations. Professional exemptions include employees with advanced knowledge in specialized fields.

Meanwhile, computer professionals and employees outside sales have separate exemption criteria based on specific job duties.

How do salary changes affect exemption status?

Changes in compensation can impact an employee's exemption status. Employers must ensure that salaries remain above the federal and state minimums to maintain an exempt classification. When employee wages fall below these thresholds because of partial workweeks or unpaid leave, an employee may temporarily lose their exempt status and become eligible for overtime pay.

What records should employers maintain for exempt employees?

Employers must maintain specific records for exempt employees, which include basic job information, salary history, and documentation of classification decisions. Documentation should specify the particular exemption category applied, regular salary reviews, and any changes in job responsibilities that could affect exemption status.