The differences between exempt employees and nonexempt employees can cause a lot of confusion for both workers and employers. Whether or not you qualify for minimum wage and/or overtime pay for working more than 40 hours per week depends on your exemption status, as stipulated by the federal Fair Labor Standards Act (FLSA).

Note that the FLSA (Fair Labor Standards Act) mandates a good percentage of employees to be paid minimum wage and overtime, but also provides an exception for employees who are considered professional or white collar and who also receive the appropriate salary.

Note that this is why they are referred to as “exempt.” Ideally, they are exempt from the minimum wage and overtime provisions of the FLSA. Almost all “blue collar” workers are non-exempt from the minimum wage and overtime provisions of the FLSA.

What is an Exempt Employee?

Have in mind that an exempt employee is a worker who is paid a salary and meets the duties of the specific exemption. An exempt employee is often not expected to keep track of the hours he or she works and therefore does not get paid overtime.

What is a Non Exempt Employee?

A non-exempt employee is one who is paid hourly; therefore, a non-exempt employee is expected to keep track of the hours he or she works and will be entitled to compensation for working overtime hours. In Florida, a non-exempt employee will have to be paid overtime if he or she works more than 40 hours in a week.

To note whether a worker should be an exempt or non-exempt employee, the court will take into consideration numerous factors. However, the ones worth noting are whether the employee has the power and independent judgment to act on behalf of the employer, and/or whether the employee has managerial functions and is overseeing employees.

If the employee has independent responsibility to make vital business decisions on behalf of his or her employer, there is a possibility that he or she is a salaried exempt employee.

Aside from that, if the employee’s position is managerial and he or she oversees employees, including hiring and firing, then there is also a possibility that he or she is classified as an exempt employee. However, this test is not entirely comprehensive and there are other factors that are also taken into consideration.

Exempt Employees in the State of Florida

The term “exempt employee” most commonly refers to an employee who is “exempt” from overtime provisions of the law. An exempt employee is expected to meet certain salary requirements coupled with other properly outlined duty requirements.

Exempt employees tend to have a substantial level of authority or carry out specific duties which render the employee exempt. Note that an exempt employee has virtually “no rights at all” under the FLSA overtime rules.

An exempt employee is only entitled under the FLSA to receive the full amount of the base salary in any work period during which s/he carries out any work. You need to understand that nothing in the FLSA restricts an employer from asking exempt employees to “punch a clock,” work a particular schedule, or “make up” time lost due to absences.

Pros and Cons of Exempt Employees in Florida

There are numerous advantages and disadvantages of hiring (and working as) an exempt employee.

For the Employer

Since exempt employees do not qualify for overtime pay, the major benefit of hiring an exempt employee is the ability to demand a certain level of performance or output while sustaining a fixed budget. However, you need to understand that exempt employees tend to cost more than their nonexempt counterparts owing to the expectation that they will use discretion and judgment in executing their duties.

For the Employee

According to experts, the major benefits of exempt employees include paycheck stability, qualification for benefits, and standard business hours. Howbeit, employees with exempt status tend to have less-flexible work schedules than nonexempt employees, and they are not paid overtime, even if they work more than 40 hours a week.

Non-Exempt Employee in the State of Florida

Non-exempt employees refer to individuals who work for qualifying employers and are guaranteed a minimum wage and overtime wages as long as they work more than 40 hours within a workweek. Employees across many industries are known to be eligible for a non-exempt status, such as numerous roles in healthcare, manufacturing, public service, media, and personal care and service occupations.

Non-exempt employees are entitled under the FLSA to time and one-half their “regular rate” of pay for each hour they actually work over the applicable FLSA overtime threshold in the applicable FLSA work period. As of 2022, employers can pay bonuses to nonexempt employees on top of their regular pay.

Pros and Cons of Nonexempt Employees

You need to understand that hiring nonexempt employees also comes with its own set of advantages and disadvantages for employers and employees alike.

For the Employer

Note that working with a nonexempt employee ensures that you have the flexibility you need, mainly because there is no minimum requirement for the number of hours they are expected to work each week. You can pay a nonexempt employee an hourly rate (minimum wage or higher) and schedule them based on your company’s needs.

Howbeit, certain disadvantages come with hiring nonexempt employees, the major one being overtime pay for employees who work more than 40 hours a week. You will be expected to correctly monitor and track employee hours to guarantee that they are being accurately compensated for their time.

For the Employee

Even though the most notable advantage of nonexempt employees is the ability to work overtime and get adequate compensation for every hour worked, have it in mind that there are certain disadvantages too that nonexempt employees should know about.

Since hours can vary week to week, non-exempt employees tend not to have a stable or consistent paycheck, especially since their work hours may not comply with the standard business hours, and, in the state of Florida, they do not qualify for paid vacation or sick time.

How to Classify Exempt vs Non-Exempt Employees in Florida

In the state of Florida and according to the FLSA, there are three basic tests you can carry out to note whether an employee should be classified as exempt or nonexempt:

  1. Salary Level Test

Have it in mind that an employee earning more than $35,568 per year ($684 per week) is eligible (but is not guaranteed) to be considered exempt.

  1. Salary Basis Test

Also note that an employee who gets a guaranteed minimum compensation, irrespective of the time actually worked, qualifies (but is not guaranteed) as exempt.

  1. Duties Test

An employee who meets the exemption requirements of tests one and two will have to carry out an exempt job duty, which can be one or more of the following:

  • Exempt executive duties: The employee supervises two or more other employees as a regular part of their job.
  • Exempt professional duties: The employee carries out intellectual activities that need specialized education and the use of discretion and judgment.
  • Exempt administrative duties: The employee carries out support operations for significant matters that require the use of discretion and judgment.

Conclusion

Employees whose jobs are protected by the FLSA are either “exempt” or “nonexempt.” Nonexempt employees tend to qualify for overtime pay. Exempt employees are not. Most employees covered by the FLSA are nonexempt. Some are not. However, note that the penalties for mis-classification of non-exempt employees can be quite brutal.

It can have very serious financial consequences for businesses. The business may have to deal with individual lawsuits, class-action lawsuits, audits by the IRS — and pay owed overtime, back wages, lost benefits, interest, and other damages.

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