Exempt Employee – Definition

Cite this article as:"Exempt Employee – Definition," in The Business Professor, updated September 24, 2019, last accessed May 31, 2020, https://thebusinessprofessor.com/lesson/exempt-employee-definition/.

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Exempt Employee Definition

According to the Fair Labor Standards Act, an exempt employee is an employee that is not qualified for minimum wage or overtime payment. The main reason for these employees being exempt by the Fair Labor Standards Act (FSLA) is that this set of employees earn substantial salaries. Exempt employees are on  a high rank when it comes to the ranking, they also have high job descriptions and responsibilities that make them not eligible for minimum wage or overtime payment.

There are three set of employees that are in the exempt employees category, these are those at the executive, administrative and professional level in a company.

A Little More on What is an Exempt Employee

Due to the roles certain employees of a company play, they are exempted from minimum wage and overtime payment. Generally, employees with high positions and those at the level of decision-making in a company are exempt employees, these include executives, administrators, professionals, and board members of a company.

Exempt employees are paid according to their performance and level of impacts in a company and not by the hours they work for. Exempt employees earn $455 every week on average and also enjoy other benefits in a company. For many states, executive position, administrative role and professional service are criteria that quality employees for exemption.  Also, an employee who has 50% of his time to himself qualifies for exemption.

Exempt Employees, Non-Exempt Employees and the Fair Labor Standards Act

In the United States, the exempt employee is part of the 1938 Fair Labor Standards Act which is part of employee protection in workplaces. The Fair Labor Standards Act specified two categories of employees, that are; exempt employees and non-exempt employees. Contained in FLSA are the hours employees should work for, the expected minimum wage and expected payment for workers when they use overtime. Any worker that works more than 40hours in a week has worked overtime and is entitled to overtime payment.

Exempt employees are those that are not entitled to minimum wage or overtime payment because of their roles in an organization. Non-exempt employees on the other hand must not be paid less than the minimum wage and must be paid for overtime, failure to do this by employers attract penalties.

References for Exempt Employee

https://www.investopedia.com/terms/e/exempt-employee.asp

https://www.thebalancecareers.com/exempt-and-a-non-exempt-employee-2061988

https://www.thebalancecareers.com › … › Human Resources › Work/Life Balance

https://www.monster.com/career-advice/article/whats-the-difference-between-exempt

https://www.hr.ucsb.edu/what-exempt-employee-or-position

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