Exempt vs non-exempt employee
An exempt employee is paid a fixed salary and is not entitled to overtime pay under the Fair Labor Standards Act, because their job duties and salary meet specific FLSA tests. A non-exempt employee must be paid at least minimum wage for every hour worked, and overtime, usually 1.5 times their regular rate, for hours worked beyond 40 in a week.
What makes an employee exempt
Exempt status under the Fair Labor Standards Act requires passing three tests together: the employee must be paid a fixed salary rather than an hourly rate, that salary must meet a federal minimum threshold that the Department of Labor updates periodically, and the employee’s actual job duties must fall into one of the recognized exemption categories, such as executive, administrative, professional, computer, or outside sales work. Job title alone never determines exemption: a worker called a manager who spends most of their time on non-managerial tasks and doesn’t meet the duties test can still be non-exempt despite the title. Many states set their own, often higher, salary thresholds and duties tests, so a worker exempt under federal rules can still be non-exempt under state law.
Why the classification matters
Misclassifying a non-exempt worker as exempt is one of the most common and costly wage-and-hour mistakes an employer can make: it typically means unpaid overtime going back months or years, plus potential penalties and interest once caught in an audit or an employee complaint. Because exemption depends on actual duties, not job title or how a worker is paid, employers need to re-evaluate classifications whenever a role’s responsibilities change materially, not just when someone is hired. Non-exempt workers who work multiple pay rates or job classifications in the same week also need overtime calculated on their weighted-average regular rate across those rates, not a flat rate, which is a common source of underpayment when payroll is calculated manually.
Recalculating overtime correctly for a non-exempt employee who works multiple rates or job classifications in one week is exactly the kind of manual math that leads to underpayment. WageTime computes weighted-average overtime automatically whenever someone works two or more rates or classifications in a week, plus minimum-wage processing at the federal, state, and local levels.
See how WageTime handles overtime and minimum wageFrequently asked
Can a salaried employee still be non-exempt?
Yes. Paying someone a salary does not automatically make them exempt. If their job duties don’t meet one of the FLSA’s exemption tests, they’re non-exempt and entitled to overtime regardless of being paid a salary.
Who decides if a job is exempt or non-exempt?
The employer makes the initial classification, but it must follow the Fair Labor Standards Act’s salary and duties tests, and state law where it sets a higher bar; the Department of Labor or a court can overturn a misclassification.