In human resources, what is the difference between exempt and non-exempt employees?
Question:
Answer:
The Fair Labor Standards Act stipulates specific tests to determine whether a job is nonexempt or exempt from its provisions. To be salaried under an FSLA exemption means an employee is paid a full salary for the workweek, regardless of the actual number of hours worked during the week.
To determine exemption status, there are tests for four types of positions: executive, administrative, professional and outside sales.
Basic definitions
According to the Bureau of Labor Statistics, the distictions among various types of employees are as follows.
Nonexempt. Nonexempt employees are those who are covered by the provisions of the Fair Labor Standards Act. Examples include employees engaged in or producing goods and services for interstate commerce; employees of certain hotels, restaurants, or motels; and others. Nonexempt employees may be salaried or may be paid according to a variety of other structures, as long as minimum wage standards and overtime regulations are met.
Exempt. Exempt employees are those who are not subject to the provisions of the Fair Labor Standards Act. Examples include executive, administrative, outside sales, and professional employees; and employees of federal, state, and local governments. Exempt employees are almost always salaried (except various computer professionals).
Salaried rate. For workers hired on a weekly, monthly, or annual basis (for example, clerical, technical, and managerial employees), the rate of pay normally expressed in terms of dollars per week, month, or year, as opposed to payment for an hour of work. Salary cannot be altered as a result of a change in productivity or quality of work; shortened work week; or other short-term leaves, such as jury duty or witness leave.
Hourly rate. Usually the rate of pay, expressed in dollars and cents per hour, for manual and other work paid on a time basis. Also used to designate the earned rate per hour under incentive methods of wage payment.
It depends on what country you live in. In some countries being exempt means they don't take you out and shoot you if you make a mistake!
Exempt and non-exempt refer to whether an employee is hourly or salary in simple terms. You are exempt from overtime, hence salary or non-exempt which means you are paid by the hour. There are fine lines and grey areas here, but that is the jist of it. Exempt workers watch their hourly rate go down the more hours they put in and non-exempt watch their hourly rates go up after 40 hours.
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