Salaried Non-Exempt

Because companies are only as good as their people, employers should make sure that their employees are given what is due to them. One of the decisions that employers make in hiring employees is job classification. For each position, employers need to ask themselves if the employee will be salaried or hourly. Not only that, but they also need to decide if it will be exempt or non-exempt. 

What does it mean when an employee is “salaried non-exempt”? 

When it comes to salaried employees, the common thinking is that salaried employees are automatically exempt employees. However, this is not the case. There are also salaried non-exempt employees. To understand salaried non-exempt, let’s break it down.

When we say somebody is a salaried employee, it means that the person receives a fixed, predetermined compensation from their employer each pay period. What does this mean? It means that the person gets paid a fixed amount of money that is based on a fixed number of hours. This is also based on the agreement between the employer. A salaried non-exempt employee is paid weekly with a salary that is at least the minimum wage. 

Now, when we say non-exempt employee, it means that the person is entitled to minimum wage and overtime pay. If the salaried non-exempt employee works for more than 40 hours in a single workweek, they are entitled to be paid for the overtime hours.

An individual who is a salaried non-exempt employee is paid on a salary basis but is still entitled to overtime pay. 

What are the laws that apply to salaried non-exempt employees? 

Just like the other employee classification, salaried non-exempt employees are covered by all employment laws under the U.S. Department of Labor and the Fair Labor Standards Act (FLSA). The Fair Labor Standards Act protects workers and regulates employment concerns by establishing minimum wage, overtime pay, recordkeeping, and youth employment standards. While we cannot enumerate all employment laws in this article, let’s focus on minimum wage and overtime pay. 

As per FLSA standards, the present federal minimum wage is $7.25 per hour. It is important to note that there are U.S. states that have set a minimum wage that is higher than the federal minimum wage. If there is an overlap, the employer must pay the minimum wage which has a higher value. This means that they must pay that which is more favorable to the employee.

The FLSA also set a minimum weekly amount for salaried employees. To be considered a salaried employee, an individual must be paid at least $684 fixed salary per week or $35,568 per year. Some states have set a higher threshold as a minimum weekly compensation for salaried employees. 

Furthermore, the FLSA states that employers are required to provide non-exempt employees with overtime pay. This rate should not be less than time-and-a-half (1.5 times the employee’s normal hourly wage) for non-exempt employees who worked over 40 hours in one week. 

How do salaried non-exempt employees differ from salaried exempt employees? 

A salaried exempt employee and a salaried non-exempt both receive the minimum weekly wage for salaried employees. However, they differ on the rule on overtime pay. Salaried exempt employees are not entitled to overtime pay. On the other hand, salaried non-exempt employees receive pay for the hours that they work beyond 40 hours in a single workweek. 

How do salaried non-exempt employees differ from hourly employees? 

Salaried non-exempt employees and hourly employees are both covered by FLSA rules and protections. Meaning, they both receive at least the minimum wage and are paid for overtime hours. What they differ in is how they receive compensation. Hourly employees, as the term implies, are paid by the hour. They are paid according to the number of hours that they spend working. On the other hand, salaried non-exempt employees are paid a fixed salary that is according to their annual salary divided by the number of pay periods. 

Which is better: to be an exempt or non-exempt employee? 

There are unique consequences that result from being an exempt employee. The same goes for being non-exempt. Non-exempt employees generally follow a stricter standard when it comes to clocking in at work, meal times, or office breaks. Exempt employees, in contrast, have more leeway on breaks in the sense that they are not as pressured to finish designated breaks on the dot. 

Exempt employees typically receive higher compensation than non-exempt employees. However, they do not receive overtime pay even if they work overtime each day to complete their job responsibilities. 

The verdict as to which is better ultimately depends on the individual and how being an exempt employee or non-exempt employee meets their needs and job satisfaction.