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Non-Exempt Employee

Last updated 29th Nov 2022


The term non-exempt employee refers to individuals that are entitled to overtime pay and other benefits as guaranteed by the Fair Labor Standards Act. Non-exempt employees are compensated for overtime worked at a rate of pay that is at least 1.5 times their normal hourly wage.


The term non-exempt employee refers to the benefits these workers are guaranteed by the Fair Labor Standards Act (FLSA), while exempt employees are not entitled to these benefits. This is one of the differences between exempt and non-exempt employees. That being said, employers have the option of providing the same benefits to exempt employees.

Generally, employees that are classified as non-exempt are entitled to overtime pay whenever they work in excess of 40 hours in a single workweek. While higher rates are oftentimes negotiated through collective bargaining, the minimum rate of overtime pay is 1.5 times the employee's hourly wage. Non-exempt employees usually have to account for all hours worked and will often be paid fractional hours. Exempt employees are salaried employees, which means they're paid for 40 hours each week regardless of the number of hours they actually work. This is a second difference between exempt and non-exempt employees.

The FLSA has established a series of tests to determine if a worker is classified as an exempt employee; all other workers are classified as non-exempt. Generally, exempt employees are those individuals that play executive, administrative, professional (learned and creative), computer, and outside sales roles in the company, or are designated as highly compensated employees. All employees making less than $455 per week are non-exempt employees, regardless of their job duties.

The above tests should be considered guidelines, the rules for exemptions are quite complex and will oftentimes require the help of an attorney to make an exact determination.

Related Terms

exempt employee, blue collar worker, green collar worker, salaried employee, hourly employee

Moneyzine Editor

Moneyzine Editor