nonexempt employee

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Non-exempt employees are guaranteed an hourly wage and overtime pay under The Fair Labor Standards Act (FLSA).  They must earn at least the federal or state minimum wage for every hour worked and overtime pay for any amount of time exceeding 40 hours (non-exempt employees are entitled to time and one-half their "regular rate" of pay for each hour they actually work over the overtime threshold). Any job that earns a minimum wage and is eligible for overtime pay is considered non-exempt.  Examples of non-exempt employees include contractors, freelancers, interns, servers, retail associates and similar jobs.  Even if non-exempt employees earn more than the federal minimum wage, they still take direction from supervisors and do not have administrative or executive positions.  The minimum salary threshold of the FLSA changes every year.  For 2020, employees must earn a minimum or $684 per week or $35,568 per year to have exempt status.  Employees who earn below this amount are designated non-exempt.  In contrast to non-exempt employees, an exempt employee is not eligible for overtime pay or minimum wage. Exempt employees receive a salary for the work they perform rather than an hourly rate, so employers pay exempt employees for the work they do instead of the number of hours they take to complete the task.

[Last updated in July of 2020 by the Wex Definitions Team]