Should you pay your employee overtime? What is the difference between an exempt and nonexempt employee?

Figuring out whether or not it’s necessary to pay an employee overtime can be a confusing task. The main deciding factor of whether or not you should pay overtime is the status of the employee. The Fair Labor Standards Act (FLSA) requires that employers classify jobs as either exempt or nonexempt. Nonexempt employees are covered by FLSA rules and regulations, and exempt employees are not. Generally speaking, nonexempt employees receive more protection under federal law than exempt employees, but most employers treat their exempt and nonexempt employees in a similar manner. The primary pieces of federal legislation that apply to the workplace are the right to a safe and healthful work environment, the right to equal employment opportunities, and the rights provided under the Family and Medical Leave Act and federal child labor laws. These laws apply to exempt and nonexempt workers alike.

Exempt positions are excluded from minimum wage, overtime regulations and other rights and protections afforded nonexempt workers. Employers must pay a salary rather than an hourly wage for a position in order for it to be exempt. Generally, only executive, supervisory, professional or outside sales positions are exempt.

Nonexempt employees are not exempt from the FLSA requirements. Employees who fall within this category must be paid at least the federal minimum wage for each hour worked and given overtime pay of not less than one-and-a-half times their hourly rate for any hours worked beyond 40 hours each week. For further information about exempt and nonexempt employees, visit the Department of Labor’s website. If you have any questions about paying your employees overtime, please contact us and we will be happy to assist you.