Administrative Exemption - Administrators must perform office or non-manual work directly related to general business operations or management.This person must regularly instruct at least two other full-time employees and have the authority to hire, fire, promote, advance, or change the status of other employees. Executive Exemption - Executives must have a primary role of managing an enterprise or a subdivision within the enterprise.Here’s a closer look at the job duties that fall into this category: Only certain roles and responsibilities qualify for an exemption.
The tricky part about classifying an employee as exempt is the final qualification listed above-specific job duties. Let’s say Steve is an exempt employee who works 35 hours in one week and 60 hours in the following week-his salary is the same for both weeks, and he’s not entitled to overtime pay. If an employee is considered exempt, their pay remains the same regardless of the number of hours they work.
Exempt employees are paid a salary and not entitled to overtime. The term “exempt” refers to overtime, and it’s the easiest way to understand the difference between these two classifications.
What Are Exempt and Non-Exempt Employees?Īll employers must classify employees as either exempt or non-exempt. This guide contains everything you need to know about classifying your employees so you can pay them properly and remain compliant. If you’re struggling to understand the difference between exempt and non-exempt employees, you’ve come to the right place. Failure to correctly classify employees can lead to serious compliance issues and fines for a business. There are two types of employees in the US-exempt and non-exempt.