Understanding “Exempt,” “Non-exempt,” “Salaried” and “Hourly” Employees

An organization can hire different types of employees and must stick to the laws regarding each type. The business world is strongly governed by federal and state laws, and when an organization defaults, it could lead to bigger problems. For this reason, it’s important to know the difference between exempt, non-exempt, salaried, and hourly employees, and the laws guiding each. 

In this article, we discuss the different types of employees and the differences among them. 

Definitions

Now, we will look at the definitions of each of these types of employees and what is expected when organizations hire any of them. 

EXEMPT EMPLOYEES

Exempt employees are not eligible for certain benefits covered by the Fair Labor Standards Act (FLSA). For example, exempt employees are not eligible for the pay that comes with working overtime. So employees in these positions can’t be given pay for working more than they are assigned to work. They are also not eligible for the minimum wage benefit offered by the FLSA. Examples of such employees include executives, administrative staff, and so on. Many exempt employees are also considered salaried employees and hardly hourly employees. 

NON-EXEMPT EMPLOYEES

On the other hand, non-exempt employees are employees who fall under the hourly category and therefore fall under those who receive a minimum wage benefit. They are offered this benefit by the FLSA and are also paid for working overtime. They have set work hours and must be paid if they are required to work more than the agreed hours. 

SALARIED EMPLOYEES

These are employees that have a set salary and are required to work within a set period within each day. They are mostly exempt employees and can hardly be found in the non-exempt category. Therefore, most times they are excluded from the benefit of the FLSA in regards to overtime pay and other coverages. 

HOURLY EMPLOYEES

On the other hand, hourly employees are paid for each hour they work. They are expected to work for a fixed amount of time, and if they are required to work overtime, then they must be paid for the same. Most hourly employees are non-exempt and are covered by the FLSA in regards to their overtime pay and minimum wage. 

Exempt vs Non-exempt: What’s the difference?

Now, we will briefly look at the difference between exempt and nonexempt employees and what laws address each. These include: 

• • Overtime: Exempt employees are not paid for working overtime even though they decide to, while non-exempt employees are paid for working overtime based on the hours they have worked. Non-exempt employees must be paid for working overtime.
  • Minimum wage: Exempt employees are not covered by the FLSA and do not meet the requirements for the minimum wage benefits, while non-exempt employees are expected to be paid the minimum wage and are covered by the minimum wage benefits under the FLSA. 
  • Shifts: Most exempt employees are considered salaried employees and do not have a particular amount of hours to work, while non-exempt employees are considered hourly employees and have a set amount of hours to work. 

Salaried vs Hourly: What’s the difference?

Let’s look at the difference between salaried and hourly employees: 

• • Shifts: Salaried workers work for a particular amount of time but not hourly, while hourly workers work for a fixed amount of hours. 
  • Payment: Salaried employees have a particular amount of salary that can be paid weekly or monthly, while hourly employees are paid on an hourly basis. 
  • Overtime: Salaried employees are usually not paid for working overtime, while hourly employees must be paid for working overtime. 

Conclusion

Now that you understand the difference between exempt, non-exempt, salaried, and hourly employees, you can make better decisions on which type to employ depending on your company’s needs. 

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