What is a Non-Exempt Employee?
Non-exempt employees are workers who are entitled to earn the federal minimum wage for every hour they work. Such workers likewise qualify for overtime pay, which is calculated as one-and-a-half times their hourly rate, for every hour they work, above and beyond a standard 40-hour workweek. These regulations are created by the federal Fair Labor Standards Act (FLSA).
What Does Non-Exempt Mean
"Non-exempt" is a term referring to employees who earn less than $455 per week. Furthermore, these workers must be directly supervised by higher-ups who manage the workflow. Non-exempt employees are expected to dutifully carry out orders, without interjecting their own management decisions. For this reason, non-exempt employees tend to dominate job sectors such as construction, maintenance, and other work that involves physical labor or carrying out repetitive tasks. Assembly line workers are a perfect example of non-exempt employees.
Non-Exempt Distinctions and Qualifications
Non-exempt employees are typically paid hourly wages, unlike exempt employees, who generally earn fixed salaries that are invariably significantly higher than what 40 hour-per-week, minimum wage earners rake in. However, while non-exempt workers must receive overtime pay of one-and-a-half times their hourly wage, for all hours worked in excess of a 40-hour workweek, exempt employees are not legally entitled to collect overtime pay—even if their workweeks radically exceed 40 hours.
If you're a non-exempt employee you are entitled to overtime when you work beyond your regular 40-hour workweek.
Under the FLSA, workers may be considered non-exempt if they either earn less than the $455 weekly minimum or if they have limited scope for self-supervision. Take, for example, a maintenance worker who's hired to work 35 hours per week, at $15 an hour. With typical weekly earnings of $525, he easily passes the salary test, in order to be designated as an exempt worker, since his weekly income exceeds the $455 threshold. But this worker is also directly supervised and therefore has minimal opportunity for independent judgment. Hence, he is ultimately classified as a non-exempt employee. If this staffer works 50 hours in a single week, he would earn his regular $15/hour rate for 40 hours, while earning $22.50 for each of the 10 extra hours he clocked in.
Under FHSA, non-exempt workers must earn the federal minimum hourly wage of $7.25, however, many states and some municipalities impose higher minimum wages than the federal floor. In these cases, the higher minimum wage overrides the federal rate.
Pros and Cons of Non-Exempt Status
Whether it is preferable to be a non-exempt employee versus an exempt one largely depends on an individual's priority for work-life balance. Although salaried exempt employees typically earn vastly more money that non-exempt minimum wage earners, the former group may not enjoy additional compensation for working long hours, while the latter make more cash for working extra hours. Contrarily, an exempt worker may be able to occasionally duck out of work early, and still collect a full paycheck. Exempt workers are also more likely to receive benefits such as paid time off, healthcare coverage, and participation in retirement plans.
Interestingly, both non-exempt and exempt employees are equally eligible for government employment benefits. Case in point: both categories of workers qualify for Social Security benefits once they retire, and both may be eligible to collect weekly unemployment payments, should they lose their jobs.