Wage and hour law
What is exempt vs non-exempt?
Also called: exempt employee, non-exempt employee
Non-exempt employees must get minimum wage and overtime. Exempt employees are excluded from those rules, but only if they meet strict salary and duties tests.
Three things have to line up for the common white collar exemptions: the employee is paid on a salary basis, the salary meets the threshold in effect, and the actual job duties fit an executive, administrative, professional, outside sales, or qualifying computer role.
A job title does not create an exemption. Calling someone a manager while they spend the week running a register does not pass the duties test, and misclassification is expensive because back overtime is owed for the hours nobody tracked.
The salary threshold has moved and been litigated in recent years, so check the current figure with the Department of Labor before you rely on it. Some states set higher thresholds than the federal one.
Source: 29 CFR Part 541 (white collar exemptions)
Handle this automatically
Kloqk is a free employee time clock for small business. It records the punches, applies your rules, and does this arithmetic for you.
Related terms
Overtime
Overtime is the extra pay a non-exempt employee earns for hours past 40 in a workweek, at no less than 1.5 times their regular rate under federal law.
Workweek
A workweek is a fixed, recurring period of 168 hours, seven consecutive 24-hour days, that you set in advance and use to calculate overtime.
Timesheet
A timesheet is the record of hours an employee worked in a pay period, used to calculate pay and to prove compliance if you are ever audited.
General information for US employers, not legal advice. Wage and hour rules change and vary by state, so confirm specifics with your state labor agency or counsel.