Exempt vs. Non-Exempt Employees: What’s the Difference? And Why Does it Matter for Your Paycheck?
Are you entitled to overtime pay? Can your employer make you work 50 or 60 hours a week without extra compensation?
The answer depends on whether you’re classified as “exempt” or “non-exempt” under the Fair Labor Standards Act (FLSA).
Many employers misclassify workers as exempt—either by mistake or to avoid paying overtime. If you’ve been wrongly classified, you may be owed significant back pay.
What Is the Fair Labor Standards Act (FLSA)?
The FLSA is a federal law that sets the rules for (i) minimum wage, and (ii) overtime pay.
It divides employees into two broad categories:
- Non-exempt employees: Entitled to overtime pay and other protections.
- Exempt employees: Excluded from FLSA’s overtime rules, usually due to job duties and salary level.
What Does “Non-Exempt” Mean?
If you are non-exempt, you are protected by the FLSA’s wage and hour provisions. This means:
- You must be paid at least minimum wage.
- You must be paid one-and-one-half (1.5) times your regular rate for all hours worked in excess of 40 per workweek.
- Your employer must track your hours worked.
- You are entitled to pay for all hours worked, including some pre- and post-shift tasks.
Most hourly workers are non-exempt, and many salaried workers are too—depending on their job duties.
What Does “Exempt” Mean?
An exempt employee is not entitled to overtime pay, no matter how many hours they work. However, just because you’re paid a salary doesn’t mean you’re automatically exempt.
To be lawfully classified as exempt under the FLSA, your job must meet all three of the following tests:
- Salary Basis Test
You must be paid a fixed salary—not hourly—and that salary must not vary based on the quantity or quality of your work. For example, your employer generally cannot deduct from your salary because you used a sick day.
- Salary Level Test
You must be paid a minimum salary of $684 per week.
If you earn less than that—even if you’re salaried—you’re likely non-exempt and entitled to overtime.
- Duties Test
Your job duties must fall into one of the exempt categories. Common exemptions include:
- Executive exemption: To fall under the executive exemption, your primary duty must be managing the business or a department of the business. You also must supervise at least two (2) full-time employees, and have authority over hiring and firing decisions.
- Administrative exemption: To fall under the administrative exemption, your primary duty must be the performance of office work related to management or business operations. In addition, the performance of your job duties must require the exercise of discretion and independent judgment.
- Professional exemption: To fall under the professional exemption, your primary duty must be the performance of work requiring advanced knowledge. The advanced knowledge must be in a field of science or learning, and typically requires a degree.
- Outside sales exemption: To fall under the outside sales exemption, your primary duty must be making sales or obtaining contracts for services, and you must regularly work away from your employer’s place of business.
If your job duties don’t clearly fit into one of these categories, you may be misclassified—even if you’re salaried.
Common Examples of Misclassification
- Assistant managers at restaurants or retail stores who spend most of their time stocking shelves, cleaning, or running a register, but are classified as exempt.
- Fast food “managers” who are paid a salary but primarily handle food prep, cleaning, and customer service.
- Healthcare workers, such as intake coordinators or case managers, who are salaried and labeled exempt, despite performing clerical or non-clinical work.
- Customer service supervisors who are salaried but spend most of their time answering phones or handling customer complaints, not managing other employees.
- Construction forepersons who are given the title of “manager” and are paid a salary, but mainly perform hands-on labor alongside hourly crew members, without genuine management responsibilities.
- Inside salespeople misclassified as “outside sales,” despite working mostly at a desk or on the phone.
In these cases, workers often put in 50+ hours a week without overtime, and the law may entitle them to recover unpaid wages going back up to 3 years, plus double damages and attorneys’ fees.
Why Classification Matters
Your classification affects:
- Whether you’re paid for overtime.
- Whether you’re protected by wage and hour laws.
- Whether you have a claim for unpaid wages, which could be substantial.
Even if your employer claims you’re “exempt,” they might be wrong—and you might be owed thousands in back pay.
What You Can Do If You Suspect Misclassification
- Review your job duties carefully—not just your title or pay structure.
- Document your hours worked, especially any overtime.
- Talk to an experienced wage and hour attorney to evaluate your classification.
- Ask about class actions if you and your coworkers are all misclassified.
Don’t Let a Job Title Cost You Overtime
If you’re doing the work of a non-exempt employee but being paid like an exempt one, you may have a legal claim for unpaid wages. Misclassification is one of the most common forms of wage theft—and one of the most fixable.
The attorneys at Wood Legal help workers challenge illegal misclassification and recover unpaid overtime. Contact us today for a free, confidential case review.
