What is a Non-Exempt Employee?

Non-exempt employee refers to a category of worker whois entitled to earn at least the minimum wage for every hour they work and qualify for overtime pay, as governed by the federal Fair Labor Standards Act (FLSA). To be considered non-exempt, employees must earn less than $455 per week and be directly supervised—as in, use personal discretion and independent judgment only a minority of their time at work. Non-exempt employees dominate in such employment sectors as construction and maintenance work.

1:40

Fair Value

Non-Exempt Distinctions and Qualifications

Non-exempt employees typically work for an hourly wage, whereas exempt employees generally earn a salary, and one that earns them more than minimum wage based on 40 hours of work a week. However, while non-exempt workers must receive pay of one-and-a-half times their hourly wage for all hours worked in excess of 40 within any seven-day week, exempt employees are not legally entitled to overtime pay. 

If you're a non-exempt employee you are entitled to overtime when you work beyond your regular 40-hour workweek.

Under the FLSA, a worker may be considered non-exempt if they either earn less than the $455 weekly minimum or have limited scope for self-supervision and independence. Take, for example, a maintenance worker who is hired to work 35 hours at $15 per hour. With typical earnings of $525 per week, they pass the salary test to be an exempt worker, since their income exceeds $455 per week. 

But the worker is also directly supervised in their work and has minimal opportunity for discretion or independent judgment. They are therefore classified as a non-exempt employee. So if they works 50 hours in a week, say, they will be paid for the first 40 hours at their regular rate of $15 an hour, with the additional 10 hours paid at one-and-half-times their regular wage, or $22.50 per hour. 

Under FHSA, non-exempt workers must be paid at least the federal minimum wage of $7.25 an hour, which came into effect in July 2009. However, many states and some municipalities have a higher minimum wage than the federal one. A higher minimum wage in the jurisdiction in which the worker is employed will override the federal one.

Pros and Cons of Non-Exempt Status

Whether working as a non-exempt employee is more financially beneficial than being an exempt one depends a lot on the job and the worker's priorities. Exempt employees often earn more in salary than do non-exempt employees who work a regular week of 40 hours or less. However, while exempt workers may receive no additional compensation for working long hours, non-exempt workers must be paid for that extra work. 

On the other hand, the converse can also be true: An exempt worker may at times be able to knock off work early and still be paid, where the non-exempt worker will rarely be eligible to earn money if they are not working. Exempt workers are also more likely to receive employer benefits such as paid time off, healthcare coverage, and participation in a retirement plan. Non-exempt and exempt employees alike are equally eligible for government employment benefits, though, including qualifying for Social Security benefits once they retire and for weekly unemployment payments in the event they lose their job.