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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated November 11, 2020

What Does Non-Exempt or Exempt Mean?

The descriptors "exempt" and "non-exempt" are used to describe different categories of employees as defined by the Fair Labor Standards Act (FSLA) according to US Federal employment law.

Typically, a non-exempt employee is an hourly wage earner who is entitled to overtime pay at a rate of 1.5 times the usual hourly rate.

What is an Exempt Employee?

An exempt employee typically earns a salary instead of an hourly wage and are not entitled to overtime pay. They usually fill executive, supervisory, professional, or outside sales roles.

What is a Non-Exempt Employee?

A non-exempt employee is subject to FLSA requirements, which means they are paid at least the federal minimum wage for the first 40 hours per work week, and 1.5 times their hourly wage for every hour worked after that in the same week.

It would seem that non-exempt employees are better protected under federal law than exempt employees, although most employers tend to treat both exempt and non-exempt employees similarly. 

Although unemployment laws in the United States vary from state to state, both exempt and non-exempt employees are entitled to unemployment benefits.

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