Employees entitled to overtime pay according to the Fair Labor Standard Act (FLSA) are known as non-exempt employees. Unlike exempt employees who work for a fixed salary, non-exempt employees are paid an hourly wage. According to federal and state laws, there is a minimum wage standard that must be met for all non-exempt employees and an Overtime Threshold of 1.5 times their regular pay rate.

In simpler words, non-exempt employees are paid wages for the number of hours they work and must be paid the federal minimum wage. And they are entitled to overtime work and payments, which would be 1.5 times their regular wage. Employers can pay higher wages if they want to but cannot pay less for both normal wages and overtime payments. These are standard rules and laws that organizations must stay compliant with. There are FLSA mistakes that they need to avoid or if not they may face legal lawsuits and penalties.

What are the differences between exempt and non-exempt employees?

The nature of overtime pay is the main and primary difference between exempt and non-exempt employees. Exempt employees work for fixed salaries that don’t concern the number of hours they work. This means the overtime payment doesn’t cover exempt employees. Whereas, non-exempt employees must be paid for the extra hours they work.

Another difference is in the federal laws for minimum employee wages. Non-exempt employees must be paid in accordance with the federal minimum wage. And exempt employees must be paid the least of $684/week or more than $35,568/year. If we compete for wages, exempt employees’ pay rates are higher than non-exempt employees.

What are the advantages of non-exempt employees?

• For non-exempt employees, there is a structured flexibility for wage payments. Non-exempt employees can both be paid on an hourly basis or on a salaried employee based.
• Work incentives and guaranteed overtime payments for the hourly wage is a motivating factor for non-exempt employees to work harder and better to achieve their targets.
• Non-exempt employees have more job opportunities and flexibility in roles and duties. They can do a wide range of work in multiple fields.
• The flexibility of hours is yet another very important advantage of non-exempt employees, as they could balance out their life and work. Non-exempt employees can choose the number of hours they work and would be paid on an hourly basis, without affecting their salary, whereas exempt employees have to work fixed hours.

Final Words

The Fair Labor Standard Act sets standards for the salary paid to non-exempt employees and the minimum wage for overtime payments. Organizations must ensure to follow and stay compliant with these laws. Since these laws are changing everywhere with the petitions to increase to decrease, keeping yourself updated is as important as following them, especially if you are running a huge organization with hundreds or thousands of employees.