Non-exempt employees are protected by the Fair Labor and Standards Act (FLSA). They are entitled to overtime pay and minimum wage. The current minimum wage is $7.25/hr. Normally, non-exempt employees work 40 hours a week. However, when they work beyond 40 hours in a week, they are entitled to overtime pay for any time worked exceeding 40 hours. Overtime is paid at 1 ½ times the regular wage rate. For example, if an employee earns $8.00/hour and works 50 hours in a week, they will receive pay of $320 for the first 40 hours and $80 for hours 40-50.
Some salaried employees may be non-exempt. When a position is classified as salaried non-exempt, the individual will earn a salary for earnings up to 40 hours and overtime pay for any hours exceeding 40. If a salary non-exempt employee works less than 40 hours, they will still continue to receive their 40 hour/week salary. Many paralegals and retail managers fall under this category.
The majority of blue collar labor workers, retail, construction and semi-skilled workers fall under the non-exempt category. These employees don’t exercise independent judgment and have little control over decisions. These employees must be supervised to ensure that they are being productive and following company policies. These positions offer less flexibility. The hours an employee is required to work is stricter and employees are often required to punch in and out when they arrive, leave, or take a break during work hours.
There are many pros and cons to being a non-exempt employee. Some employees prefer to work on an hourly basis. They prefer to receive overtime pay for time worked in excess of 40 hours. Oftentimes, these employees work in positions that require long hours of work and it makes financial sense to get overtime pay rather than a salary.