Are you an exempt or nonexempt employee? Why does it matter?

Entering the workforce or starting a new job can be both stressful and exciting. You’ll need to learn a lot about your role, employer and responsibilities, but another thing you want to be sure you understand is what type of employee you are: exempt or nonexempt?

What’s the difference?

The key difference between exempt and nonexempt is whether you are eligible for overtime pay for any hours you work over 40 hours a week. 

• Employees not entitled to overtime pay are exempt from these wage requirements. They generally work in professional or executive capacities and earn a salary that exceeds the minimum wage.
• Employees entitled to overtime pay are nonexempt because they are protected under the Fair Labor Standards Act (FLSA)

Your employer will use specific tests to determine what type of employee you are. A job must meet different sets of requirements to be exempt, depending on the type of exemption. These types include:

1. Executive exemptions
2. Professional exemptions
3. Administrative exemptions
4. Computer employee exemptions
5. Outside sales exemptions
6. Exemptions for highly compensated employees

Within each of these, there are specific metrics that a role must meet for it to qualify as exempt.

In other words, your job title or an employer’s preference will not determine whether you are exempt. There is a lot more to it.

Issues that arise with classification

Conflicts and confusion can arise because there is some gray area and room for interpretation when determining whether a specific role is exempt or nonexempt. 

Sometimes, employers intentionally misclassify someone to avoid paying them overtime wages. In other cases, a misclassification is accidental. 

There are also situations where a job that started as nonexempt changes and now qualifies for exemption. 

These and similar situations can lead to serious wage violations, including unpaid overtime. Because of this, it is crucial to know whether you are exempt or nonexempt and if that classification is accurate. If you have questions or concerns, your employer, a Human Resources representative or an attorney can help you determine your next steps.