What is the difference between exempt and non-exempt employees?

The distinction between exempt and non-exempt employees primarily revolves around the issue of overtime pay, which is a key component of employment law in many jurisdictions. Exempt employees are those who are exempt from the Fair Labor Standards Act (FLSA) regulations concerning overtime. This means they are not entitled to overtime pay, which typically applies to employees who work beyond the standard 40 hours per week. Such employees usually hold positions that are considered professional, executive, or administrative in nature, and their compensation is often structured as a salary as opposed to an hourly wage.

On the other hand, non-exempt employees are entitled to receive overtime pay for hours worked over the stated threshold. These employees are often covered by FLSA regulations and typically receive hourly wages, ensuring that they are compensated for all hours worked, including any excess over the standard workweek.

This distinction is crucial for employers as it determines how payroll and labor regulations are applied, impacting budget considerations and employee relations. Understanding this difference enables organizations to structure their workforce appropriately, ensuring compliance with labor laws while also aligning compensation with job responsibilities.