Non-Exempt Employees – Definition, Requirements, and Laws with Example

Non-exempt employees are those who are qualified to earn a minimum wage and an overtime pay as well. They are paid according to the number of hours they work, unlike the Exempt Employees. The non-exempt employees are expected to work by executing the orders carefully, without interrupting their own management commitments.

What is a Non-Exempt Employee?

Non-exempt employees are referred to those employees who earn less than $684 per week, although it may not happen always. They are in charge of the higher authorities who manage the workflow. The non-exempt employees are also known as the “blue collar” employees. As the non-exempt employees are expected to follow the orders, they are assigned in posts that include constructions, maintenance, building and other works that involve physical activities. They have a limited opportunity for taking their own decisions. The payments of the non-exempt employees are fixed by the Fair Labor Standards Act (FLSA). The non-exempt employees are based on the level of responsibilities of the workers rather than the job titles of the employees.

Law Regarding Non-Exempt Employee

It is mentioned in the law that a non-exempt employee must be paid with the minimum wage and overtime payment for more than 40 hours per week. The FLSA rules also mention that the employees are authorized to time and one half of their usual payment for each hour of overtime. The state labor laws needs to be contacted if any of the employees are working for any supplementary requirements. On the other hand, as long as the employees do not work for more than 40 hours per week, there is no need to pay the employees for the overtime. In order to calculate the total amount to pay to the employees, it must first take the employee’s regular working hours during their work periods. If a non-exempt employee wants to receive their overtime payment, they need to work for the employer that comes under the Fair Labor Standards Act (FLSA). The FLSA handles those employers who meet the following criteria:

• Earns an amount that is close to $500,000 per year
• Takes care of the ill or elderly (e.g. hospitals, nursing homes etc.)
• Works for any level of educational institutions (e.g. primary school, high school etc.)
• Works in a governmental agency.

Most of the employers are able to meet the above criteria; hence they are required to pay their employees with overtime wages. If the workers are working for an institution that does not match with the criteria mentioned above, then the FLSA may still take the responsibilities if their working week involves the production of the products within the state or the foreign commerce.

What are the Requirements of Being a Non-Exempt Employee?

The employees who do not meet the requirements of the duties and the standards that are mentioned in the federal or state guidelines are considered as non-exempt employees. The non-exempt employees are required to earn the federal, state or local minimum wage, any of which is the highest. There are two important points that are required to be a non-exempt employee:

• Minimum Wage: A non-exempt employees should be paid with a minimum wage at least. The federal minimum wage is $7.25/ hour at present. However, there are many cities and states that set their minimum wages that are applicable to their areas. Hence, the employees should get the highest amount of minimum wage that has been fixed according to their locality.
• Overtime pay: A non-exempt employee should also be paid with overtime wages of they work for more than 40 hours. The overtime wages are usually 1.5 times more than the employee’s usual hourly wage.

The FLSA issues a number of tests in order to assure that whether an employee is non-exempt or not. Some of the examples of these tests are the minimum pay levels, the existence of a minimum amount of compensation pay and the presence or absence from specific duties. There might be other regulations that are mandatory in other states, where the governments of these states have placed a more strict overtime payments to the employees.

Example of a Non-Exempt Employee

An example of a non-exempt employee is a technician that has been hired in an organization. The employee does not have any control over other employees, and they do not have their own opinion or judgments. The employee also will not need any previous knowledge or experience to their job. The employee is being paid with $38,000/year in salary form. Another example of a non-exempt employee is a receptionist who works for 20 hours/week. Their responsibilities include answering calls over phone and transfer calls to the mentioned departments. The employee is being paid with $240/week and earns as hourly wages.

The Advantages and the Disadvantages of Non-Exempt Employees

Advantages

• Flexibility in the wage structure: Non-exempt employees are paid on an hourly or on salary basis, apart from the exempt employees. This provides more flexibility to the employers in terms of paying their employees. Moreover, non-exempt employees that are paid with minimum amount of salary cost much lower to be hired than the exempt employees.
• Incentive to work: When the employees are guaranteed with their overtime pay of 1.5 times their hourly wage, the employers can provide motivation to their employees to strive hard in order to achieve the goals of the company. On the other hand, the exempt employees tend to be less motivated even after getting a fixed amount of monthly payment.
• Flexibility in roles and job duties: Non-exempt employees are flexible to work in different roles that ranges from managerial to administrative departments. It provides the employees and the employers with more potentiality and flexibility, which in turn increases the productive output of the organization.

Disadvantages

• Overtime pay: The employers must recompense the non-exempt employees after working for hours, which may cost a lot for a huge number of non-exempt employees. This, in turn, may decrease the motivation of the non-exempt employees and their willingness to work for the organization.
• Lack of freedom: The non-exempt employees may find it difficult to take offs as they are paid for the number of hours they work. The number of hours that are not worked by the employees will not be counted by their employers at the time of the payment. It can be risky for the non-exempt to take sick leaves and holiday leaves, especially in organizations that do not allow them with one. Thus, the employees will not be encouraged to stay at home and must be present at their workplace even if it is against their will.
• Some companies do not allow overtime pays: There are many organizations that do not allow the non-exempt employees to work overtime. The employers do this in order to prevent high amount of money from going out of their organization. As a result, the non-exempt employees fail to complete their 40 hour working weeks and are deprived of enjoying the bonuses, the insurance plans, the retirement plans etc. as compared to the exempt employees.
• Completing the tasks on time: Unlike the exempt employees, the non-exempt employees must complete their tasks regardless of the other activities that they are doing. This may sometimes create a conflict among the non-exempt employees sometimes as they are provided with the deadlines of the tasks they are assigned and will not get paid if they are unable to meet their deadlines.

How Many Hours does a Non-Exempt Employee Work?

Most of the non-exempt employees are authorized to work for 40 hours/ week. However, there are also exceptions and these employees may work for more than 40 hours. The exceptions may apply to professions such as medical care providers, government police officers, firefighters and some EMS employees.

Non-exempt medical care providers may work for more than 40 hours or may be paid according to the 8/80 system. It means that a medical care provider who works for 8 excess hours than their regular hours per day, or 80 hours for every two weeks will be paid according to this process of 8/80.

Government police officers, firefighters and some EMS employees may be paid according to 40 hours per week or 7(k) systems. For instance, if any of the employees (police officers, firefighters and EMS employees) works for more than 40 hours, then the overtime pay of those employees will tend to be due according to FLSA. The permissible work periods may extent from 7 to 28 days. The 7(k) work system is only applicable to government job holders and not in the private sectors.

The Bottom Line

Being a non-exempt employee has its own advantages and disadvantages, but there are some criteria that must be considered while classifying a non-exempt employee which are: the level of salary, the basis of salary and the types of jobs or responsibilities in an organization.

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References

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