What Is an Exempt Employee?

An exempt employee refers to an employee whose overtime must be paid in accordance with the U.S. Fair Labor Standards Act (FLSA).

What Are the Categories of Exempt Employees?

Employees eligible for overtime pay include all workers who are paid by the hour and who do not occupy a management or executive position. Generally speaking, exempt employees include:

  • Employees who are paid hourly based on the minimum wage determined by the U.S. federal or state government
  • Employees who receive a salary based on the number of hours worked, rather than an annual salary

What Are the Disadvantages of Working with an Exempt Employee?

The disadvantages of working with an exempt employee include:

  • The need to pay overtime at time-and-a-half
  • The obligation to pay the statutory minimum wage

What Is the Difference Between Exempt and Non-Exempt Employees?

An exempt employee under the Fair Labor Standards Act (FLSA) must be paid overtime, while a non-exempt employee may be denied the right to paid overtime.

How to Determine the Salary of an Exempt Employee Versus a Non-Exempt Employee?

An exempt employee must be compensated in accordance with the law in force, whether based on the salary determined by the federal government or the government of the U.S. state where they work.

A non-exempt employee must earn a minimum of $684 per week or $35,568 annually.

What Are the Differences Between Exempt and Non-Exempt Employees in Canada and the U.S.?

In Canada, employees are not categorized according to their exemption status under the Canada Labour Code. All employers must comply with the Canada Labour Code, regardless of their employees’ status.

All employees must therefore receive overtime pay, regardless of whether their compensation is based on hours worked or annual salary.

Overtime pay in Canada may vary, however, depending on the employment contract between the employer and employee.

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