Exempt v. Non-Exempt Status


Hello, Dustin Paschal here with Simon Paschal, PLLC for our weekly video tip. And today, we’re going to talk about some words or that I think are misunderstood by a lot of employers and a lot of HR professionals and they have very specific meanings, so want to touch on them. Those words are non-exempt and exempt, and why they matter is it comes into play for overtime purposes. And non-exempt means that the employee is not exempt from the overtime requirements, meaning if the employee works more than 40 hours in a work week, they’ve got to receive time and a half of their regular rate. Now, there’s some exceptions to that in some different ways, and we’ll talk about in other videos how to do some pay arrangements to kind of work with the way you pay your employees. But as a general rule, that’s what non-exempt means.

Non-exempt employees can be paid a salary, they can be paid hourly. The way they’re paid does not determine necessarily whether or not they’re exempt. That’s just one piece. But job duties is what really determines that. And we’ll also talk in a later video about what job duties make an employee non-exempt. Exempt, however, means that the employee is exempt from the overtime pay requirements, meaning you do not have to pay that employee time and a half of their regular rate for any hours worked over 40. There are some general exemptions and we’ll talk about those in future videos, and there’s also a litany of specific exemptions that exist under the regulations.

But as a general matter, an exempt employee is not due overtime. Now, an exempt employee also has some other requirements and some other things come into play with respect to what you can and cannot do with that employee’s pay and that employees time off. But again, those are some things that we’ll talk about in future videos. For now, remember that just because an employee is paid a salary does not make that employee exempt. It is a much broader question and a much more detailed question. So we look forward to talking to you about that in future videos. Thanks!

 

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