What is a non-exempt employee?
Non-exempt employees are workers who are entitled to the federal minimum wage for each hour of work. These workers are also entitled to overtime pay, which is calculated as one and a half times their hourly rate, for each hour worked, beyond a standard 40-hour work week. These regulations are created by the Federal Fair Labor Standards Act (FLSA).
What does non-exempt mean
“Not exempt” is a term for employees who earn less than $ 455 per week. In addition, these workers must be directly supervised by senior managers who manage the work flow. Non-exempt employees are expected to conscientiously execute orders without interrupting their own management decisions. For this reason, non-exempt employees tend to dominate employment sectors such as construction, maintenance and other work involving physical work or repetitive tasks. Assembly line workers are a perfect example of non-exempt employees.
Non-exempt distinctions and qualifications
Non-exempt employees are generally paid by the hour, unlike exempt employees, who generally earn fixed wages that are invariably significantly higher than the 40 hours a week minimum wages earn. However, while non-exempt workers must receive overtime one and a half times their hourly wages, for all hours worked beyond a 40-hour work week, exempt employees are not legally entitled to collect overtime pay – even if their work weeks are drastically over 40 hours.
If you are a non-exempt employee, you are entitled to overtime when you work beyond your normal 40-hour work week.
Under the RSA, workers can be considered non-exempt if they earn less than the weekly minimum of $ 455 or if they have limited possibilities for self-monitoring. Take, for example, a maintenance person who is hired to work 35 hours a week at $ 15 an hour. With a typical weekly salary of $ 525, he easily passes the salary test to be designated as an exempt worker, since his weekly income exceeds the threshold of $ 455. But this worker is also directly supervised and therefore has only a minimal possibility of independent judgment. Therefore, he is ultimately classified as a non-exempt employee. If this staff member worked 50 hours in a single week, he would earn his regular rate of $ 15 / hour for 40 hours, while earning $ 22.50 for each of the 10 hours of overtime he recorded.
Under the FHSA, non-exempt workers must earn the federal minimum hourly wage of $ 7.25, however, many states and some municipalities impose minimum wages higher than the federal floor. In these cases, the higher minimum wage prevails over the federal rate.
Advantages and disadvantages of non-exempt status
Whether it is better to be a non-exempt employee compared to an exempt employee depends largely on an individual’s priority for work-life balance. Although exempt wage earners generally earn much more money than non-exempt minimum wage workers, the former may not receive additional compensation for long hours, while the latter earn more for overtime. Conversely, an exempt worker can sometimes withdraw early from work while receiving a full pay check. Exempt workers are also more likely to receive benefits such as paid leave, health coverage, and participation in pension plans.
Interestingly, non-exempt and exempt employees are also eligible for government benefits. Example: both categories of workers are eligible for social security benefits after retirement, and both may be eligible for weekly unemployment benefits if they lose their jobs.