What are Exempt vs. Non-Exempt Employees?

Staffing your small business doesn't end with hiring and training employees. Per federal regulations on overtime pay, employees must also be classified as exempt or non-exempt. Unless you want to face a potential lawsuit or stiff fines, you should learn the differences between exempt vs. non-exempt employees.

Exempt vs. non-exempt employees: Why is exemption status important?

The Fair Labor Standards Act (FLSA) establishes a basic set of rules that employers must follow to ensure the fair treatment of employees. These rules range from minimum wage and overtime pay standards to the employment of minors.

Certain professions are completely excluded from the FLSA umbrella of protections. For example, certain agricultural workers and employees of movie theaters are not covered by the FLSA. But non-covered professions can also include those professions governed by other worker laws. For example, truck drivers are covered under the Motor Carriers Act, so they are not also covered under the FLSA.

The FLSA protects the majority of employees in the U.S. Additionally, FLSA-covered employees are further classified as either exempt or non-exempt employee. The exemption status of an employee determines whether he or she is entitled to overtime pay or not.

For this reason, it is important to assess the appropriate classification for each hire. This will help set appropriate expectations about wages and expected working hours for your employees. It will also prepare you legally and financially for the hire.