{"id":2396,"date":"2024-10-11T13:46:56","date_gmt":"2024-10-11T13:46:56","guid":{"rendered":"https:\/\/clockify.me\/learn\/?p=2396"},"modified":"2026-03-09T06:42:06","modified_gmt":"2026-03-09T06:42:06","slug":"exempt-vs-non-exempt-employees","status":"publish","type":"post","link":"https:\/\/clockify.me\/learn\/business-management\/exempt-vs-non-exempt-employees\/","title":{"rendered":"Key Differences Between Exempt and Nonexempt Employees"},"content":{"rendered":"\n<p class=\"translation-block\">One of the main criteria when classifying employees is determining whether they are exempt or nonexempt. This classification specifies whether an employee is covered by the Fair Labor Standards Act (FLSA) in terms of minimum wage and overtime pay.<\/p>\n\n\n\n<p class=\"translation-block\">Employees classified as \u201cexempt\u201d are not covered by the FLSA minimum wage and overtime regulations, while the act covers \u201cnonexempt\u201d employees.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block\">Some types of employees can only be exempt from overtime regulations, while others can be exempt from minimum wage, or both the minimum wage and overtime rules. In addition, some employees may also be exempt from child labor provisions.<\/p>\n\n\n\n<p class=\"translation-block\">In this article, we will take a detailed look into exempt vs non-exempt employees and help you classify them correctly according to the FLSA.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"600\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/Exempt-vs-non-exempt.jpg\" alt=\"Exempt vs non exempt - cover\" class=\"wp-image-2408\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/Exempt-vs-non-exempt.jpg 1200w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/Exempt-vs-non-exempt-300x150.jpg 300w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/Exempt-vs-non-exempt-1024x512.jpg 1024w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/Exempt-vs-non-exempt-768x384.jpg 768w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/Exempt-vs-non-exempt-18x9.jpg 18w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n<\/div>\n\n\n<ul class=\"wp-block-list key-takeaways\">\n<li class=\"translation-block\">Exempt employees are usually paid on a salary basis and are considered exempt from the FLSA overtime provisions.<\/li>\n\n\n\n<li class=\"translation-block\">Nonexempt employees are usually paid on an hourly level and are covered by both minimum wage and overtime FLSA provisions.<\/li>\n\n\n\n<li class=\"translation-block\">The FLSA includes several job categories which are considered exempt, such as executive, administrative, or professional employees.<\/li>\n\n\n\n<li class=\"translation-block\">For an employee to qualify for the FLSA executive, administrative, or professional exemption, they must earn a salary of at least $844 per week.<\/li>\n\n\n\n<li class=\"translation-block\">Some states have their own salary threshold for exemption status.<\/li>\n\n\n\n<li class=\"translation-block\">There are different recordkeeping requirements for exempt and nonexempt employees.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"what-does-exempt-mean\" class=\"wp-block-heading translation-block\">What does \u201cexempt\u201d mean?<\/h2>\n\n\n\n<p class=\"translation-block\">The phrase \u201cexempt\u201d refers to <strong>someone<\/strong> <strong>free from an obligation or a liability<\/strong>.<\/p>\n\n\n\n<p class=\"translation-block\">We should mention that \u201cexemption\u201d and \u201cexception\u201d have two different meanings. Exemption refers to someone being free from certain obligations and privileges, while exception refers to something or someone not being affected by a particular rule.<\/p>\n\n\n\n<h2 id=\"what-is-an-exempt-employee\" class=\"wp-block-heading translation-block\">What is an exempt employee?<\/h2>\n\n\n\n<p class=\"translation-block\">Exempt employees are employees who are <strong>not eligible for the <\/strong><a href=\"https:\/\/clockify.me\/flsa-compliance\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>FLSA<\/strong><\/a><strong> overtime and minimum wage provisions<\/strong>. This means that exempt employees don\u2019t have the right to the federal minimum wage of $7.25 per hour and the overtime rate of 1.5 times the regular rate of pay.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block\">The reason why such employees are exempt is mainly because:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">They are paid a fixed salary every month,<\/li>\n\n\n\n<li class=\"translation-block\">They work in fields that require advanced knowledge,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">They are considered highly compensated employees, and other reasons.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block\">Whether an employee will be exempt or nonexempt is determined individually, and both the employee and the employer should check the terms and conditions of each exemption. Nonetheless, the responsibility for each exemption rests on the employer.<\/p>\n\n\n\n<h3 id=\"examples-of-exempt-employees\" class=\"wp-block-heading translation-block\">Examples of exempt employees<\/h3>\n\n\n\n<p class=\"translation-block\">The FLSA has many categories of workers who can be viewed as exempt.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block\">Here are a few examples of exempt occupations:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Lawyers,<\/li>\n\n\n\n<li class=\"translation-block\">Engineers,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Seasonal workers,<\/li>\n\n\n\n<li class=\"translation-block\">Salespeople,<\/li>\n\n\n\n<li class=\"translation-block\">Architects,<\/li>\n\n\n\n<li class=\"translation-block\">Doctors, and<\/li>\n\n\n\n<li class=\"translation-block\">Teachers.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"exempt-employees-pros-and-cons\" class=\"wp-block-heading translation-block\">Exempt employees \u2014 pros and cons<\/h3>\n\n\n\n<p class=\"translation-block\">Although exempt employees are not eligible for either minimum wage or overtime pay, there are certain benefits for this type of employment. Let\u2019s look at the pros and cons of being an exempt employee in the table below.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Pros \u2705<\/strong><\/th><th><strong>Cons \u274c<\/strong><\/th><\/tr><\/thead><tbody><tr><td><strong>Constant income<\/strong> \u2014 exempt employees are usually full-time employees paid a fixed salary, giving them a steady and safe monthly income.<\/td><td><strong>No FLSA coverage<\/strong> \u2014 exempt employees are not eligible for minimum wage or overtime provisions under the FLSA.&nbsp;Due to this, they don\u2019t receive additional compensation for overtime work.&nbsp;<\/td><\/tr><tr><td><strong>Career development <\/strong>\u2014 many exempt employees work in occupations that require advanced knowledge (e.g., managers, computer workers, and teachers), giving them further opportunities to develop and grow.<\/td><td><strong>Additional pressure <\/strong>\u2014 due to exempt employees working in more senior positions, they are expected to perform at the best of their capabilities. This can cause a lot of pressure as companies depend highly on these employees.<\/td><\/tr><tr><td><strong>Employer benefits <\/strong>\u2014 certain employees might include benefits to their employees as a part of their employment. Some of these benefits include pension plans, bonuses, healthcare programs, paid vacation and sick leave, and 401(k) retirement programs.<\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 id=\"what-is-a-nonexempt-employee\" class=\"wp-block-heading translation-block\">What is a nonexempt employee?<\/h2>\n\n\n\n<p class=\"translation-block\">Nonexempt employees are employees who are eligible for FLSA minimum wage and overtime provisions. This means that nonexempt employees are guaranteed a <a href=\"https:\/\/www.dol.gov\/general\/topic\/wages\/minimumwage\" target=\"_blank\" rel=\"noreferrer noopener\">federal minimum wage<\/a> of at least <strong>$7.25 per hour<\/strong>.<\/p>\n\n\n\n<p class=\"translation-block\">Moreover, nonexempt employees are guaranteed <a href=\"https:\/\/www.dol.gov\/agencies\/whd\/overtime\" target=\"_blank\" rel=\"noreferrer noopener\">overtime pay<\/a> for working over 40 hours a week and 8 hours a day. Such workers must receive overtime pay of <strong>1.5 times their regular pay rate for every overtime hour worked<\/strong>.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block\">Although nonexempt employees are often paid by the hour, they can sometimes be paid a salary or a commission.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block\">\ud83c\udf93 <a href=\"https:\/\/clockify.me\/overtime-tracker\" target=\"_blank\" rel=\"noreferrer noopener\">Track overtime hours with Clockify<\/a><\/p>\n\n\n\n<h3 id=\"examples-of-nonexempt-employees\" class=\"wp-block-heading translation-block\">Examples of nonexempt employees<\/h3>\n\n\n\n<p class=\"translation-block\">The federal law doesn\u2019t feature a list of nonexempt employees, and many categories of employees can be eligible for this type of employment.<\/p>\n\n\n\n<p class=\"translation-block\">Here are a few common examples of nonexempt employees:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Plumbers,<\/li>\n\n\n\n<li class=\"translation-block\">Construction workers,<\/li>\n\n\n\n<li class=\"translation-block\">Customer support agents,<\/li>\n\n\n\n<li class=\"translation-block\">Police officers, firefighters, and other first responders,<\/li>\n\n\n\n<li class=\"translation-block\">Retail workers, and<\/li>\n\n\n\n<li class=\"translation-block\">Factory workers.<\/li>\n<\/ul>\n\n\n\n<h3 id=\"nonexempt-employees-pros-and-cons\" class=\"wp-block-heading translation-block\">Nonexempt employees \u2014 pros and cons<\/h3>\n\n\n\n<p class=\"translation-block\">Let\u2019s look at the pros and cons of being a nonexempt employee in the table below.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Pros \u2705<\/strong><\/th><th><strong>Cons \u274c<\/strong><\/th><\/tr><\/thead><tbody><tr><td><strong>Guaranteed overtime pay<\/strong> \u2014 under federal law, employees with more than 40 hours worked in a workweek are guaranteed additional pay. This pay equals 1.5 times their regular rate of pay for each hour that exceeds 40.<\/td><td><strong>Lower salary <\/strong>\u2014 nonexempt employees are usually paid an hourly wage that can be lower than the salary exempt employees receive. Many nonexempt workers are paid a federal minimum of $7.25 per hour.<\/td><\/tr><tr><td><strong>Varying schedules <\/strong>\u2014 nonexempt employees usually work multiple shifts, which can be beneficial when scheduling time off. Moreover, because they perform straightforward tasks, they can easily swap shifts with other employees.<\/td><td><strong>Limited career development<\/strong> \u2014 most of the employees who are classified as nonexempt work in manual labor occupations and perform straightforward tasks. Due to this, it is difficult to develop their careers and achieve higher rankings.&nbsp;However, some nonexempt employees, such as first responders, can achieve higher rankings and grow their careers.&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 id=\"the-fair-labor-standards-act-flsa-exemptions\" class=\"wp-block-heading translation-block\">The Fair Labor Standards Act (FLSA) exemptions<\/h2>\n\n\n\n<p class=\"translation-block\">In this section, we will take a closer look at the Fair Labor Standards Act (FLSA) exemptions, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Executive, administrative, and professional employee exemption,<\/li>\n\n\n\n<li class=\"translation-block\">Commissioned sales employees paid by retail establishments exemption,<\/li>\n\n\n\n<li class=\"translation-block\">Computer-related professions exemption, and others.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block\">\ud83c\udf93 <a href=\"https:\/\/webapps.dol.gov\/elaws\/whd\/flsa\/screen75.asp\" target=\"_blank\" rel=\"noreferrer noopener\">Full list of FLSA exemptions<\/a><\/p>\n\n\n\n<h3 id=\"executive-administrative-and-professional-employee-exemption\" class=\"wp-block-heading translation-block\">Executive, administrative, and professional employee exemption<\/h3>\n\n\n\n<p class=\"translation-block\">The most common FLSA overtime and minimum wage exemption covers <a href=\"https:\/\/www.dol.gov\/agencies\/whd\/fact-sheets\/17a-overtime\" target=\"_blank\" rel=\"noreferrer noopener\">executive, administrative, or professional (EAP) employees<\/a>.<\/p>\n\n\n\n<p class=\"translation-block\">To qualify for such exempt status, an employee must meet the following 3 criteria:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">They must be salaried employees,<\/li>\n\n\n\n<li class=\"translation-block\">They must be paid at least the specified minimum salary threshold of <strong>at least $844 per week<\/strong>, and<\/li>\n\n\n\n<li class=\"translation-block\">They must conduct executive, administrative, or professional duties.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block\">In addition, the US Department of Labor also has an alternate test for highly compensated employees who qualify for the exemption if they earn at least $132,964 per year.<\/p>\n\n\n\n<p class=\"translation-block\">In April 2024, the US Department of Labor declared a <a href=\"https:\/\/www.dol.gov\/agencies\/whd\/overtime\/rulemaking\" target=\"_blank\" rel=\"noreferrer noopener\">final rule<\/a> regarding the standard salary level for executive, administrative, professional employees, outside sales and computer employees. On July 1, 2024, this rule increased the salary threshold from $684 to $844 per week.<\/p>\n\n\n\n<p class=\"translation-block\">The salary level will increase again on January 1, 2025, and will grow to a minimum of $1,128 per week. After that, it will grow on January 1, 2027, and it is set to increase every 3 years to adjust for rising inflation rates.<\/p>\n\n\n\n<p class=\"translation-block\">When it comes to highly compensated employees, their annual salary threshold will also increase, growing from $132,964 to $151,164 per year starting January 1, 2025.<\/p>\n\n\n\n<h3 id=\"commissioned-sales-employees-paid-by-retail-establishments-exemption\" class=\"wp-block-heading translation-block\">Commissioned sales employees paid by retail establishments exemption<\/h3>\n\n\n\n<p class=\"translation-block\">Employees who work in retail establishments and are paid on a commission basis are <a href=\"https:\/\/www.dol.gov\/agencies\/whd\/fact-sheets\/20-flsa-commissions-retail\" target=\"_blank\" rel=\"noreferrer noopener\">exempt from overtime pay<\/a> if more than half of their earnings come from commissions.<\/p>\n\n\n\n<p class=\"translation-block\">For an employee to qualify for exempt status, they must meet the following 3 criteria:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">They must work in a retail or service establishment,<\/li>\n\n\n\n<li class=\"translation-block\">Their regular pay rate must be higher than 1.5 times the standard minimum wage for every overtime hour, and<\/li>\n\n\n\n<li class=\"translation-block\">More than half of their earnings in a pay period must be from commissions.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block\">To calculate the employees\u2019 earnings accordingly, employers must keep certain records, such as the total number of work hours, earnings, and wages.<\/p>\n\n\n\n<h3 id=\"computer-related-professions-exemption\" class=\"wp-block-heading translation-block\">Computer-related professions exemption<\/h3>\n\n\n\n<p class=\"translation-block\">Employees who work as system analysts, programmers, software developers, or in any similar position are <a href=\"https:\/\/www.dol.gov\/agencies\/whd\/fact-sheets\/17e-overtime-computer\" target=\"_blank\" rel=\"noreferrer noopener\">exempt from overtime and minimum wage provisions<\/a> if they earn at least <strong>$27.63 per hour<\/strong>.<\/p>\n\n\n\n<p class=\"translation-block\">For an employee to be qualified for this type of exemption, they must meet the following 3 criteria:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">They must be paid on a salary basis and earn at least $27.63 per hour,<\/li>\n\n\n\n<li class=\"translation-block\">They must work as a programmer, software developer, or any other similarly skilled worker in the computer field, and<\/li>\n\n\n\n<li class=\"translation-block\">Their primary duties must involve:\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Application of system analysis and procedures,<\/li>\n\n\n\n<li class=\"translation-block\">Design, development, research, modification, creation, or testing of computer software,<\/li>\n\n\n\n<li class=\"translation-block\">Design, documentation, testing, creation, or modification of operating systems, or<\/li>\n\n\n\n<li class=\"translation-block\">Any combination of the duties above.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block\">This exemption <strong>does not apply<\/strong> to employees who manufacture or repair computer hardware or related equipment.<\/p>\n\n\n\n<h3 id=\"other-flsa-exemptions\" class=\"wp-block-heading translation-block\">Other FLSA exemptions<\/h3>\n\n\n\n<p class=\"translation-block\">The list of FLSA exemptions is extensive, so we have included some additional exemptions in a table. The table includes employee categories exempt from overtime, minimum wage, or both (\u274c=nonexempt; \u2705=exempt).<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Type of employee<\/strong><\/th><th><strong>Minimum wage<\/strong><\/th><th><strong>Overtime pay<\/strong><\/th><\/tr><\/thead><tbody><tr><td><a href=\"https:\/\/www.dol.gov\/agencies\/whd\/fact-sheets\/19-flsa-motor-carrier\" target=\"_blank\" rel=\"noreferrer noopener\">Drivers, loaders, or mechanics<\/a><\/td><td><strong>\u274c<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Employees working on farms<\/td><td><strong>\u2705<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/www.dol.gov\/agencies\/whd\/fact-sheets\/18-flsa-seasonal-amusement\" target=\"_blank\" rel=\"noreferrer noopener\">Seasonal workers<\/a><\/td><td><strong>\u2705<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Babysitters<\/td><td><strong>\u2705<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Airline workers<\/td><td><strong>\u274c<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Employees with disabilities<\/td><td><strong>\u2705<\/strong><\/td><td><strong>\u274c<\/strong><\/td><\/tr><tr><td>Federal criminal investigators<\/td><td><strong>\u2705<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Firefighters in small departments<\/td><td><strong>\u274c<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Fishing workers<\/td><td><strong>\u2705<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Elderly companions<\/td><td><strong>\u2705<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Motion picture theater employees<\/td><td><strong>\u274c<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Newspaper delivery employees<\/td><td><strong>\u2705<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Police officers in small departments<\/td><td><strong>\u274c<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Railroad workers<\/td><td><strong>\u274c<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Taxi drivers<\/td><td><strong>\u274c<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><tr><td>Switchboard operators<\/td><td><strong>\u2705<\/strong><\/td><td><strong>\u2705<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"translation-block\">Bear in mind that you can contact your local <a href=\"https:\/\/www.dol.gov\/agencies\/whd\/contact\/local-offices\" target=\"_blank\" rel=\"noreferrer noopener\">Wage and Hour District Office<\/a> to apply for any of the previously mentioned exemptions.<\/p>\n\n\n\n<h2 id=\"state-exemptions\" class=\"wp-block-heading translation-block\">State exemptions<\/h2>\n\n\n\n<p class=\"translation-block\">All of the previously mentioned exemptions are listed in the FLSA. However, some states have their own salary requirements for classifying employees as exempt or nonexempt, and these states usually demand a higher salary than the federal government.<\/p>\n\n\n\n<p class=\"translation-block\">At this time, only several states have these laws in place, but it is expected that many other states might establish their own salary thresholds in the future.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>State<\/strong><\/th><th><strong>State law<\/strong><\/th><\/tr><\/thead><tbody><tr><td>Alaska<\/td><td>To qualify for the executive, administrative, or professional minimum wage and overtime exemption, employees must earn a <a href=\"https:\/\/labor.alaska.gov\/news\/2023\/news23-18.htm\" target=\"_blank\" rel=\"noreferrer noopener\">salary of at least $938,40 per week<\/a>.&nbsp;<\/td><\/tr><tr><td>California<\/td><td>Employees <a href=\"https:\/\/www.dir.ca.gov\/DIRNews\/2023\/2023-66.html\" target=\"_blank\" rel=\"noreferrer noopener\">must earn at least $66,560 annually<\/a> to qualify for overtime exemption. Moreover, the standard salary threshold for computer-related professions exemption is <a href=\"https:\/\/www.dir.ca.gov\/OPRL\/ComputerSoftware.htm\" target=\"_blank\" rel=\"noreferrer noopener\">at least $55,58 per hour<\/a>.<\/td><\/tr><tr><td>Colorado<\/td><td>The standard salary threshold for employees to qualify for exemption is <a href=\"https:\/\/www.sos.state.co.us\/CCR\/GenerateRulePdf.do?ruleVersionId=11206&amp;fileName=7%20CCR%201103-1\" target=\"_blank\" rel=\"noreferrer noopener\">at least $1,057 per week<\/a>. Regarding computer professionals, the salary threshold is $31.41 per hour.<\/td><\/tr><tr><td>Washington<\/td><td>Washington also has its own salary threshold for overtime exemption, and it differs between small and large businesses. Employees <a href=\"https:\/\/www.lni.wa.gov\/forms-publications\/f700-207-000.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">must earn at least $1,302.40 per week<\/a> to qualify for an exemption, regardless of business size. From 2025, this threshold is set to increase yearly, growing to $1,337.60 for small businesses and $1,504.80 for large businesses.<\/td><\/tr><tr><td>New York<\/td><td>The state of New York has its own salary threshold, which varies among cities.&nbsp;New York City, Nassau, Suffolk, and Westchester County require employees who work in administrative and executive occupations to <a href=\"https:\/\/dol.ny.gov\/minimum-wage-frequently-asked-questions\" target=\"_blank\" rel=\"noreferrer noopener\">earn at least $1,200 per week<\/a> to qualify for exemption.&nbsp;On the other hand, employees who work in New York State must earn at least $1,124.20 per week to qualify for the abovementioned exemption.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 id=\"recordkeeping-requirements-for-exempt-and-nonexempt-employees\" class=\"wp-block-heading translation-block\">Recordkeeping requirements for exempt and nonexempt employees<\/h2>\n\n\n\n<p class=\"translation-block\">Exempt and nonexempt employees also differ when it comes to certain <a href=\"https:\/\/www.dol.gov\/agencies\/whd\/fact-sheets\/21-flsa-recordkeeping\" target=\"_blank\" rel=\"noreferrer noopener\">recordkeeping requirements<\/a>. As exempt employees are primarily salaried employees, the federal law isn\u2019t too strict for employers.<\/p>\n\n\n\n<p class=\"translation-block\">Employers <strong>who employ exempt employees<\/strong> must keep the following records:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Workweek duties,<\/li>\n\n\n\n<li class=\"translation-block\">Beginning and end of a workweek,<\/li>\n\n\n\n<li class=\"translation-block\">Employee wages,<\/li>\n\n\n\n<li class=\"translation-block\">Personal information about the employee (e.g., name, address, social security number),<\/li>\n\n\n\n<li class=\"translation-block\">Payment dates, and<\/li>\n\n\n\n<li class=\"translation-block\">Payment period information.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block\">On the other hand, employers <strong>who employ nonexempt employees<\/strong> must follow more strict recordkeeping requirements, which include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Personal information about the employee (e.g., name, address, social security number),<\/li>\n\n\n\n<li class=\"translation-block\">Start and end time for every workday,<\/li>\n\n\n\n<li class=\"translation-block\">Payment date,<\/li>\n\n\n\n<li class=\"translation-block\">Payment period information,<\/li>\n\n\n\n<li class=\"translation-block\">Basis on which the employee is paid (e.g., hourly rate),<\/li>\n\n\n\n<li class=\"translation-block\">Overtime earnings,<\/li>\n\n\n\n<li class=\"translation-block\">Wages for each pay period,<\/li>\n\n\n\n<li class=\"translation-block\">Additional employee payment,<\/li>\n\n\n\n<li class=\"translation-block\">Earnings per day,<\/li>\n\n\n\n<li class=\"translation-block\">Total number of work hours, and<\/li>\n\n\n\n<li class=\"translation-block\">Deductions.<\/li>\n<\/ul>\n\n\n\n<p class=\"translation-block\">Employers should keep the abovementioned payroll records for a period of <strong>at least 3 years<\/strong>.<\/p>\n\n\n\n<p class=\"translation-block\">\ud83c\udf93 <a href=\"https:\/\/clockify.me\/work-hours-tracker\" target=\"_blank\" rel=\"noreferrer noopener\">Track employee work hours with Clockify<\/a><\/p>\n\n\n\n<h2 id=\"frequently-asked-questions-about-exempt-vs-nonexempt-employees\" class=\"wp-block-heading translation-block\">Frequently asked questions about exempt vs. nonexempt employees<\/h2>\n\n\n\n<p class=\"translation-block\">To make this article as comprehensive as possible, we have included an FAQ section covering the most common questions about exempt and nonexempt employees.<\/p>\n\n\n\n<h3 id=\"is-a-business-owner-considered-an-exempt-employee\" class=\"wp-block-heading translation-block\">Is a business owner considered an exempt employee?<\/h3>\n\n\n\n<p class=\"translation-block\">Yes, under a <a href=\"https:\/\/www.dol.gov\/agencies\/whd\/fact-sheets\/17b-overtime-executive\" target=\"_blank\" rel=\"noreferrer noopener\">special rule<\/a>, business owners who own at least 20% of a company are considered exempt executive employees. The standard salary requirement doesn\u2019t apply in this case.<\/p>\n\n\n\n<h3 id=\"how-do-you-determine-if-a-position-should-be-exempt-or-nonexempt\" class=\"wp-block-heading translation-block\">How do you determine if a position should be exempt or nonexempt?<\/h3>\n\n\n\n<p class=\"translation-block\">Misclassifying employees can lead to potential legal consequences and lawsuits. To determine if an employee position is exempt or nonexempt, employers must look at 3 different tests, which include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Salary basis test (employees must be paid a salary),<\/li>\n\n\n\n<li class=\"translation-block\">Salary test (employees must earn at least $844 per week), and<\/li>\n\n\n\n<li class=\"translation-block\">Duties test (employees must perform executive, administrative, or professional job duties).<\/li>\n<\/ul>\n\n\n\n<h3 id=\"what-are-the-disadvantages-of-being-an-exempt-employee\" class=\"wp-block-heading translation-block\">What are the disadvantages of being an exempt employee?<\/h3>\n\n\n\n<p class=\"translation-block\">Although exempt employees are usually paid more, there are several disadvantages to this type of employment.&nbsp;<\/p>\n\n\n\n<p class=\"translation-block\">Exempt employees are not eligible for overtime pay, meaning they might have to work additional hours without compensation.<\/p>\n\n\n\n<p class=\"translation-block\">Moreover, exempt employees tend to work in higher-ranking positions, which brings additional pressure and may lead to <a href=\"https:\/\/clockify.me\/blog\/productivity\/career-burnout\/\" target=\"_blank\" rel=\"noreferrer noopener\">burnout<\/a>.&nbsp;<\/p>\n\n\n\n<h3 id=\"who-is-exempt-from-overtime-pay\" class=\"wp-block-heading translation-block\">Who is exempt from overtime pay?<\/h3>\n\n\n\n<p class=\"translation-block\">Certain categories of employees are considered exempt from overtime pay. Some of these categories include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"translation-block\">Executive, administrative, or professional employees who earn at least $844 per week,<\/li>\n\n\n\n<li class=\"translation-block\">Computer experts who earn at least $27.63 per hour,<\/li>\n\n\n\n<li class=\"translation-block\">Commissioned sales employees who work in retail establishments,<\/li>\n\n\n\n<li class=\"translation-block\">Railroad workers,&nbsp;<\/li>\n\n\n\n<li class=\"translation-block\">Taxi drivers, and others.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"how-clockify-by-cake-com-helps-you-track-employee-work-hours\" class=\"wp-block-heading translation-block\">How Clockify by CAKE.com helps you track employee work hours<\/h2>\n\n\n\n<p class=\"translation-block\">According to federal law, employers must keep certain payroll records for every employee. One of these records is the employee\u2019s work hours.<\/p>\n\n\n\n<p class=\"translation-block\">Tracking work hours for every employee can be daunting and time-consuming, and it can lead to certain legal problems if not done correctly.<\/p>\n\n\n\n<p class=\"translation-block\">That\u2019s why you should use time tracking software to help you with the whole process and save you countless hours and money. For this purpose, you can try <a href=\"https:\/\/clockify.me\/\" target=\"_blank\" rel=\"noreferrer noopener\">Clockify<\/a> by <a href=\"https:\/\/cake.com\/\">CAKE.com<\/a>.<\/p>\n\n\n\n<p class=\"translation-block\">\n<div class=\"banner banner-dark clockify-gradient-landing-2\">\n    <div class=\"banner-text lg:pr-[6rem]\">\n        <h2 class=\"translation-block text-2xl !mb-4\">Free time tracker<\/h2>\n        <p class=\"translation-block !text-sm\">Time tracking software used by millions. Clockify is a time tracker and timesheet app that lets you track work hours across projects.<\/p>\n\n        <div class=\"banner-buttons d-flex space-x-4 translation-block\">\n            <a class=\"rounded-md px-6 py-2 bg-white\" href=\"https:\/\/app.clockify.me\/en\/signup\" target=\"_blank\">Sign up<\/a>\n\n                            <a class=\"button-2\" href=\"https:\/\/clockify.me\/apps\" target=\"_blank\">Download<\/a>\n                    <\/div>\n    <\/div>\n\n    <div class=\"banner-image banner-image-middle \">\n        <picture>\n            <source srcset=\"https:\/\/clockify.me\/learn\/wp-content\/themes\/cake-learn\/src\/images\/clockify\/banners\/landing-2@2x.png 2x\" alt=\"Illustration\"  media=\"(min-width: 1022px)\" \/>\n            <img decoding=\"async\" src=\"https:\/\/clockify.me\/learn\/wp-content\/themes\/cake-learn\/src\/images\/clockify\/banners\/landing-2.png\"  alt=\"Illustration\" \/>\n        <\/picture>\n    <\/div>\n<\/div>\n    <\/p>\n\n\n\n<p class=\"translation-block\">With Clockify\u2019s time tracker, your employees can easily track their work hours with a simple click of a button.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"874\" src=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/time-tracker-clockify.jpg\" alt=\"Clockify time tracker\" class=\"wp-image-2399\" srcset=\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/time-tracker-clockify.jpg 1200w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/time-tracker-clockify-300x219.jpg 300w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/time-tracker-clockify-1024x746.jpg 1024w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/time-tracker-clockify-768x559.jpg 768w, https:\/\/clockify.me\/learn\/wp-content\/uploads\/2024\/10\/time-tracker-clockify-16x12.jpg 16w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><figcaption class=\"wp-element-caption\">Clockify time tracker<\/figcaption><\/figure>\n<\/div>\n\n\n<p class=\"translation-block\">Employees can simply write down what they are working on and start the timer, or they can enter work hours manually.<\/p>\n\n\n\n<p class=\"translation-block\">Later, you can see all this time data and track work hours for every employee individually without losing countless hours.<\/p>\n\n\n\n<p class=\"translation-block\">What are you waiting for? Start saving money and time by using Clockify!<\/p>\n\n\n\n<p class=\"custom-btn translation-block\"><a href=\"https:\/\/app.clockify.me\/en\/signup\" target=\"_blank\" rel=\"noreferrer noopener\">Sign up for Clockify today<\/a><br><\/p>\n\n\n\n<p class=\"translation-block\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Misclassifying employees can lead to legal problems and potential lawsuits. Learn the differences between exempt and nonexempt employees.<\/p>\n","protected":false},"author":29,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4,5],"tags":[],"class_list":["post-2396","post","type-post","status-publish","format-standard","hentry","category-business-management","category-business-regulations"],"acf":[],"_links":{"self":[{"href":"https:\/\/clockify.me\/learn\/wp-json\/wp\/v2\/posts\/2396","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clockify.me\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clockify.me\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clockify.me\/learn\/wp-json\/wp\/v2\/users\/29"}],"replies":[{"embeddable":true,"href":"https:\/\/clockify.me\/learn\/wp-json\/wp\/v2\/comments?post=2396"}],"version-history":[{"count":15,"href":"https:\/\/clockify.me\/learn\/wp-json\/wp\/v2\/posts\/2396\/revisions"}],"predecessor-version":[{"id":4995,"href":"https:\/\/clockify.me\/learn\/wp-json\/wp\/v2\/posts\/2396\/revisions\/4995"}],"wp:attachment":[{"href":"https:\/\/clockify.me\/learn\/wp-json\/wp\/v2\/media?parent=2396"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clockify.me\/learn\/wp-json\/wp\/v2\/categories?post=2396"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clockify.me\/learn\/wp-json\/wp\/v2\/tags?post=2396"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}