Which occupation is considered nonexempt under the fair labor standards act?

In the United States, the Fair Labor Standards Act (FLSA) applies to the majority of employers and employees. If you've never heard of the FLSA, it's the legislation that governs when an employer is required to pay an employee overtime, among other things. While some states may have their own overtime laws, the FLSA applies nationwide.

The first step to determining whether an employee may be eligible for overtime under the FLSA is to figure out if they are either "exempt" or "non-exempt." The reason being, employers typically aren't required to pay exempt employees overtime.

But what, exactly, is the different between exempt and non-exempt employees? Let's dig into that.

White collar vs. blue collar: How do they apply to FLSA?

FLSA exempt employees are often, but not always, workers whose jobs are sometimes referred to as “white collar," which usually boils down to the fact that they mostly work in an office setting. Specific job duties defined by FLSA guidelines help make the determination about a position's exemption status.

These white-collar, FLSA-exempt duties often include the types of work done by:

• Executives
• Administrators
• Professional workers (that is, learned/knowledge-based positions)
• Computer and technology professionals
• Outside salespeople

Of course, many non-exempt workers may perform some of these duties, but through the FLSA, exempt status must meet these criteria and others related to compensation.

In contrast, some workers with FLSA non-exempt status work in occupations many consider to be “blue collar," which tends to refer to trade and labor-oriented work. These workers often gain the skills and knowledge to perform their jobs through on-the-job training and apprenticeships.

Of course, there are also office workers who are non-exempt, but there are few, if any, labor-intensive positions that carry exempt status.

Some blue-collar professions may include:

• Construction workers
• Plumbers
• Mechanics
• Carpenters
• Electricians

Blue-collar, non-exempt workers perform skill-based work and trades, but they do not qualify as exempt because their occupation doesn't meet the standards of job duties that carry exempt status.

Pay differences for exempt and non-exempt workers

Per the FLSA, exempt employees are typically salaried workers and do not receive overtime pay. Their annual salary is often a negotiable figure that is agreed upon before the job is accepted and doesn't fluctuate even if the employee works fewer than 40 hours in a week. On the other hand, non-exempt workers are typically paid on an hourly basis and receive overtime pay for any hours worked over the standard 40 per week — although some states have their own laws that vary from this general rule.

Due to the nature of many non-exempt job positions, hourly pay often makes more sense than a fixed annual salary. That's why the FLSA sets out to ensure compensation standards for these positions, since occasionally the hours can fall short of — or exceed — the 40-hour work week.

For a worker receiving hourly pay, the FLSA standard creates overtime compensation, measured as time and a half — the hourly rate plus half.

In contrast, FLSA exempt workers are often on a fixed annual salary, but they can receive bonuses or other financial incentives. The nature of these jobs carries less of a need for reduced or extended hours beyond the 40-hour week and in some cases includes high earnings. Therefore, exempt workers do not receive overtime pay and their weekly pay stays the same even if they work fewer than 40 hours in a week.

It is also worth noting that exemption status under the FLSA usually requires that the employee receive pay of at least $684.00 each week to qualify. However, non-exempt workers may earn even higher wages but not qualify for exempt status due to their job classification or duties.

FLSA is a long and enduring piece of legislation

Workers and employers have been governed by the FLSA for decades. Over the years since it was passed, there have been numerous revisions and amendments as the workforce has changed. What has stayed the same, however, is the core function of the FLSA. Exempt and non-exempt status differentiation has long helped keep labor standards fair and workplace needs easier to pinpoint and execute.

If you would like to stay up to date regarding changes to the FLSA and other related employment law and regulations, you should try Practical Law for free today. Experience for yourself the difference Practical Law can make.

Exempt and nonexempt: You've likely seen these terms when filling out an application, noticed them in job postings and heard them used in conversation. But if you're like most people, the difference between the two categories is fuzzy at best. Do you even know what exempt workers are exempt from?

Let's start at the beginning. The Fair Labor Standards Act (FLSA) requires that employers classify jobs as either exempt or nonexempt. Nonexempt employees are covered by FLSA rules and regulations, and exempt employees are not.

What is an exempt employee?

Exempt positions are excluded from minimum wage, overtime regulations, and other rights and protections afforded nonexempt workers. Employers must pay a salary rather than an hourly wage for a position for it to be exempt. Typically, only executive, supervisory, professional or outside sales positions are exempt positions.

What is nonexempt employee?

Nonexempt employees, as the term implies, are not exempt from FLSA requirements. Employees who fall within this category must be paid at least the federal minimum wage for each hour worked and given overtime pay of not less than one-and-a-half times their hourly rate for any hours worked beyond 40 each week.

Tax liability differences

Aside from the various tax brackets into which we all fall based on our income level, there is no difference in how exempt and nonexempt employees are taxed. For both categories of workers, all pay is “earned income” and therefore taxable to the wage earner based upon tax bracket. Income is income; it doesn't matter if it's earned by the hour or as an annual salary.

Overtime implications

Exempt employees are generally expected to devote the number of hours necessary to complete their respective tasks, regardless of whether that requires 35 hours per week or 55 hours per week. Their compensation doesn't change based on actual hours expended. Exempt employees aren't paid extra for putting in more than 40 hours per week; they're paid for getting the job done. On the other hand, nonexempt employees must be paid overtime if they work more than 40 hours per workweek, so it often behooves employers to keep nonexempt employees' hours down.

Workers' rights and benefits implications?

Generally speaking, nonexempt employees receive more protection under federal law than exempt employees. However, most employers treat their exempt and nonexempt employees in a similar manner. The primary pieces of federal legislation that apply to the workplace are the right to a safe and healthful work environment, the right to equal employment opportunities, and the rights provided under the Family and Medical Leave Act and federal child labor laws. These laws apply to exempt and nonexempt workers alike.

Unemployment implications

Although unemployment benefits vary from state to state, generally both exempt and nonexempt employees can collect unemployment benefits. But to be sure just what those benefits include, check with your state's Department of Labor.

So which is better?

That depends on you. Some workers would rather be employed in nonexempt positions to ensure they're paid for every hour they work. Others prefer the latitude that comes with salaried positions. For example, most nonexempt employees are going to be held to a more stringent standard regarding things like casual time. Exempt employees can ordinarily spend a reasonable amount of time around the watercooler without incurring the boss's wrath; nonexempt employees' time tends be more closely monitored, and designated breaks are allowed only at certain times during the workday.

Generally, exempt employees are paid more than nonexempt employees, because they are expected to complete tasks regardless of the hours required to do them. If staying late or coming in early is required to do the job, exempt employees are frequently expected to do just that. Nonexempt employees typically work only the prescribed number of hours.

This article is intended to be a primer on this issue, but HR laws and regulations can be enormously complex. For more information, visit the Department of Labor's Web page that addresses these issues.

Additional info for today's workers

There's a lot to know when you're a member of the workforce. The more informed you are, the better off you'll be, both now and in the future. Need some help keeping on top of the important stuff? Join Monster today. As a member, you'll get career advice and useful tips sent directly to your inbox. We'll help you make sense of the complex issues so you can concentrate on your job. Isn't that a relief?