DEFINITION OF ‘NON-EXEMPT EMPLOYEE’
The term “Non-exempt Employee” refers to a category of employees entitled to overtime pay and minimum wage as described in the Fair Labour Standards Act (FLSA). Non-exempt employees must be paid for each hour that they work and 1.5x their hourly wage for any hours worked over 40. Employees who earn less than $455/week and those who do not use personal discretion and independent judgement at least 50% of the time are considered non-exempt. Blue-collar, construction, semi-skilled and maintenance workers are non-exempt.
INVESTOPEDIA EXPLAINS ‘NON-EXEMPT EMPLOYEE’
A maintenance worker is hired to work 35 hours at $15/hour. At $525/week, he passes the salary test (his income is greater than $455/week) but, as he cannot exercise discretion or independent judgement and is directly supervised, he is classified as a non-exempt employee. If he works 50 hours one week, he will be paid for the first 40 hours at his regular rate: $15. The additional 10 hours will be paid at 1.5x his regular wage: $22.5.
In this example, an exempt employee would earn $525/week regardless of having worked 50 hours. The non-exempt worker, on the other hand, has earned $825.