Employee Classification: The Difference Between Exempt and Nonexempt

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Employee classification can be difficult, and there are several differences between exempt and non-exempt employees. Should you be tracking hours and paying overtime? Is a base salary all that I need to offer? If you don’t take the time to classify an employee correctly, you could face some hefty penalties. Learn how to assign the proper classification to your employees based on their role and responsibilities.

What is the Fair Labor Standards Act (FLSA)

Exempt employees are exempt from the minimum wage and overtime laws of the Fair Labor Standards Act (FLSA). These individuals can work more than 40 hours in a week and not receive overtime.

A non-exempt employee is required to adhere to FLSA and must be paid at a higher rate for overtime hours. The federal law states non-exempt employees should receive 1.5 times their regular pay rate for any hours worked over 40 per work week. These employees must also be paid at least minimum wage for all hours worked.

Time Worked

If your employee leaves work early can you deduct that time from their paycheck? It depends. Non-exempt employees don’t have to be paid for time not worked. Exempt employees must be paid, but how they are paid

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