There are basically two types of employees, the exempt employee, and the non-exempt employee. Understanding what each individual type means will help you make better decisions as an employer or an employee. <\/p>\n\n\n\n
In this article, we’ll talk about what an exempt employee means, its implications, and how it works. See the table of contents below.<\/p>\n\n\n\n
According to monster.com<\/a><\/strong>, an exempt employee is someone excluded from minimum wage<\/a>, overtime regulations, and other rights and protections afforded non-exempt workers. Exempt employees are paid salary and not hourly wage for a position or job done. <\/p>\n\n\n\n Investopedia<\/a> further defines the term \u2018exempt employee\u2019 as a category of employees set out in the Fair Labor Standard Act (FLSA). Keenly put, exempt employees do not receive overtime pay, nor do they qualify for the minimum wage. When an employee is exempt, it primarily means that they are exempt from receiving overtime pay. <\/p>\n\n\n\n READ ALSO: The Best Business Payroll Services \u2013 Employee Payment made easy<\/a><\/strong><\/p>\n\n\n\n FLSA classifies the following category of workers as exempt employees<\/a><\/p>\n\n\n\n To know if you qualify as an exempt employee, there are certain criteria to be checked.<\/p>\n\n\n\n The first criterion<\/strong> that should be considered to qualify as an exempt employee<\/a> is salary payment. <\/strong>Exempt employees must be salaried workers as opposed to hourly wage workers. <\/p>\n\n\n\n The second criterion <\/strong>is for the employee to earn at least the FSLA recommended threshold. Employees must earn a salary of at least $35,568 per year, which is $684 per week, to be considered exempt.<\/p>\n\n\n\n Lastly, the employees must have high-level responsibilities. These job duties have specific responsibilities that qualify them for exemption. Let’s take a look at the three main categories of exempt employee job duties:<\/p>\n\n\n\n To fall under executive exemption, an employee must be able to meet the following requirements:<\/p>\n\n\n\n To fall under the administrative exemption, an employee must meet the following requirements:<\/p>\n\n\n\n To fall under the professional exemption, or \u201clearned professional,\u201d an employee must meet the following requirements:<\/p>\n\n\n\n READ ALSO: How To Become A CEO<\/a><\/strong><\/p>\n\n\n\n While exempt employees tend to make more money per year, there are implications that sets them apart from their counterparts. Lets take a look at the pros and cons of exempt employee status.<\/p>\n\n\n\n Pros<\/strong><\/p>\n\n\n\n Cons<\/strong><\/p>\n\n\n\n There are two basic types of employees in the workplace\u2014\u201cexempt employees\u201d and \u201cnon-exempt employees.\u201d <\/p>\n\n\n\n The most significant difference between the two is the pay for overtime work. The term \u201cexempt\u201d means exempt from being paid overtime. Exempt employees are typically expected to work the number of hours that are necessary to complete the tasks associated with their job, whether it takes them 30 hours or 50. <\/p>\n\n\n\n Their income does not change based on the number of hours that they work. In other words, they aren’t paid for their time, necessarily, they’re paid for getting the job done. Nonexempt employees, conversely, are paid on an hourly basis and receive time-and-a-half for working more than 40 hours per week.<\/p>\n\n\n\n Another difference between exempt and nonexempt employees has to do with the type of work the employee performs. Exempt employees regularly perform higher-level duties with respect to the overall operations of the company, regardless of what their job title may be.<\/p>\n\n\n\n Nonexempt employees can earn any amount per week, while exempt employees must earn a minimum of $455 per week to pass for the exception. <\/p>\n\n\n\n Although being an exempt employee doesn\u2019t include overtime, it offers more security than a non-exempt position. An exempt employee is expected to put in the work necessary to get the job done. He usually has more responsibilities than an hourly employee and often receives higher earnings. <\/p>\n\n\n\n To obtain this exemption, the employee must meet the FLSA wage and\/or job duties test. This includes most professional, administrative, and executive employees who are paid on a salary basis. <\/p>\n\n\n\n Lastly, exempt employees generally have more potential for job growth than hourly workers and have a steady stream of income that they can look forward to each payday. <\/p>\n\n\n\nWhat qualifies as an Exempt Employee? How it works<\/strong><\/span><\/h2>\n\n\n\n
1. Executive exemption<\/strong><\/span><\/h3>\n\n\n\n
2. Administrative exemption<\/strong><\/span><\/h3>\n\n\n\n
3. Professional exemption<\/strong><\/span><\/h3>\n\n\n\n
Implications of being an exempt employee? Pros and Cons of the Exempt Employee Status<\/strong><\/span><\/h2>\n\n\n\n
Exempt Employee versus Non-Exempt Employee<\/strong><\/span><\/h2>\n\n\n\n
Final Words<\/span><\/h2>\n\n\n\n
References<\/strong><\/span><\/h2>\n\n\n\n
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