Employers need to identify employees at an early stage, so that they can take the necessary steps to fulfill their expectations and demands. But before that, the employer should know…
Exempt Vs. Non-exempt Employees: Understanding the Main Difference
Human resources and employment standards are governed by the Department of Labor. The Fair Labor Standards Act (FLSA) defines the applicability of employee-related benefits. In this article, we will look at the two major types of employees defined by the act.
The Fair Labor Standards Act (FLSA) of 1938 applies to employees engaged in interstate commerce or employed by an enterprise engaged in commerce or in the production of goods for commerce, unless the employer can claim an exemption from coverage. The intention of this enactment is to govern labor-related points such as overtime, minimum wages, child labor protection, etc. It must be noted that the FLSA is a federal act and applies to almost all employed people in the United States.
Difference Between Exempt and Non-Exempt Employees
The differentiation between non-exempt and exempt employees is based upon wage rate and working hours.
- Exempt Employees: An employee who is exempt does not come under the jurisdiction of FLSA. Therefore, it is not mandatory for the employer to grant ‘general employee benefits’ (bonus, incentives, increments, allowances, etc.) to such employees. Irrespective of the law, some employers provide the exempt employees with some partial benefits. Whether an employment is exempt/non-exempt as per FLSA, is disclosed by the employer during the recruitment process.
Some work profiles are specially safeguarded under the scope of FLSA and employers cannot appoint an exempt employee at such a position. Although the exempt employees do not come under the jurisdiction of FLSA, general labor laws such as work time doctrine and wage rates apply to them.
- Non-Exempt Employees: Non-exempt employees lie within the scope of FLSA and all provisions thereof. Such employees are entitled to a minimum pay that is prescribed by the act. In addition to that, such employees are also entitled to a maximum working time limit of 44 hours per week, divided into a daily quota as prescribed by the act. In addition to these provisions, it is mandatory for the employer to pay overtime for any additional hours worked beyond 40 hours per week. The rate of payment is one-and-a-half times regular pay and is in accordance with the unit of hours.
Exempt employees are not full-time employees and are hired on the basis of workload. Many of them also work seasonally. For example, extra workers hired during peak season at an amusement park would fall under this category. ‘Outside sale’ employees (also known as external sales personnel) are considered to be exempt employees while in-house sales personnel are considered to be non-exempt employees.
You should definitely find out under which category you fall in. It is also necessary that you request your employer to furnish you with the benefits that you shall be entitled to, if you are a non-exempt employee. In order to know more, you may also check the Fair Labor Standards Act on the Department of Labor website.