Navigating the FLSA: Exempt vs. non-exempt workers

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.