Key Differences at a Glance
| Feature | Non-Exempt | Exempt |
|---|---|---|
| Overtime pay | ✅ Required (1.5x over 40 hrs) | ❌ Not required |
| Minimum wage | ✅ Protected | ❌ Not protected (salary basis) |
| Hour tracking required? | ✅ Yes — employer must track | ❌ No |
| Pay docked for partial-day absence? | ✅ Yes (hourly workers) | ❌ No — full day's salary |
| Typical pay type | Hourly | Salary |
The FLSA Duties Tests for Exemption
To be exempt, an employee must earn ≥$684/week AND meet ONE of these duties tests:
Primary duty is managing the enterprise or a department/subdivision AND:
- Customarily directs the work of 2 or more employees
- Has authority to hire/fire, or recommendations given particular weight
Examples: Store manager, department head, team lead with hiring authority
Primary duty is office or non-manual work related to management or general business operations AND:
- Work includes exercise of discretion and independent judgment with respect to matters of significance
Examples: HR professional, financial analyst, compliance officer, marketing manager
Primary duty requires advanced knowledge in a field of science or learning, acquired by a prolonged course of specialized intellectual instruction. OR requires invention, imagination, originality, or talent in a recognized creative field.
Examples: Doctor, lawyer, engineer, architect, CPA, journalist (creative), graphic designer
Misclassification: A Common Problem
If you're classified as exempt but earn under $35,568/year, or perform mostly routine tasks without real discretion, you may be misclassified. Misclassified employees can recover up to 3 years of back overtime pay plus liquidated damages. Contact the DOL Wage and Hour Division if you suspect misclassification.