Non-exempt employees must be paid overtime for hours over 40 in a workweek. Exempt employees are not owed overtime, but only if they meet specific salary and duties tests. The classification changes how you pay, track and deduct.
| Topic | Non-exempt | Exempt |
|---|---|---|
| Overtime over 40 hours | Required | Not required |
| Pay structure | Hourly or salary | Salary of at least the required level |
| Tracking hours | Required for pay | Often tracked for scheduling, not for overtime |
| Pay deductions for partial days | Pay only for hours worked | Generally not allowed; full-day absences for personal reasons are an exception |
| Short week due to lack of work | Pay for hours worked | Full salary for any week with work performed |
Deduction rules for exempt staff have several specific exceptions. Check them before docking any salary.
EZTime labor rule alerts flag overtime and missed rest periods before payroll.
A logistics company pays its dispatch coordinator a salary of $1,000 a week and has treated the role as exempt. She regularly works 48 hours. Her work is following set routing rules and entering loads; route decisions are made by the operations manager.
She meets the salary level, but her work does not involve discretion and independent judgment on matters of significance, so she does not pass the administrative duties test. She is non-exempt.
If her $1,000 salary is meant to cover 40 hours, her regular rate is $25 an hour, so 8 overtime hours at $37.50 add $300 a week. The company reclassifies the role, starts tracking her time, and either pays the overtime or limits the hours. It also reviews the other salaried roles in the same office.
Classifications drift. A role that was mostly managing can become mostly hands-on after staffing changes, and salary levels change with state rules. Once a year, list every exempt employee with their salary, their main duties as they are now and the exemption relied on, and check each against current federal and state rules.
When a role no longer qualifies, change it going forward, tell the employee in writing what changes, and start recording hours. Get advice on any back pay question before the change, rather than after.
A restaurant’s assistant manager has been exempt for years. After two cooks leave, she spends most shifts on the line and rarely directs anyone.
In the yearly review, the owner notices the change in duties and reclassifies the role as non-exempt hourly at an equivalent rate, with overtime over 40 hours, until the kitchen is fully staffed. When new cooks are hired and she returns to mostly managing, the role is reviewed again. Each decision and its reason are written down in her file, so the history of the role is clear to anyone who checks later.
A non-exempt employee is covered by the FLSA’s minimum wage and overtime rules and must be paid overtime for hours over 40 in a workweek.
Yes. A salaried employee who does not meet an exemption is non-exempt and owed overtime.
The DOL lists the standard level as $684 per week, or $35,568 a year. Some states set a higher level.
Only in limited situations, such as full-day absences for personal reasons. Partial-day deductions generally are not allowed.
The employer classifies, but the classification must meet the legal tests. The job title alone does not decide it.
Not for overtime, but many employers track them for scheduling, workload or state rules.
EZTime turns clock-ins and approved corrections into signed monthly reports you can export to PDF or Excel for payroll.