Exempt and nonexempt employees are governed by the Fair Labor Standards Act (FLSA), which is enforced by the Department of Labor. The law creates standards for minimum wage and overtime pay. Nonexempt employees must be paid at least $7.25 per hour (or more, depending on state laws) as of 2011, and receive 1-1/2 times their rate for overtime pay. Exempt employees must meet certain criteria before they are exempted from minimum wage and overtime requirements.
Excluded From Coverage
Certain jobs are excluded from the FLSA because they fall under a different labor law or are excluded within the act itself. As of 2011, these jobs include seasonal amusement or recreation employees, seamen on foreign vessels, employees of small newspapers and telephone companies, newspaper delivery people, fishing employees and farm workers on "small farms" that have less than 500 days of labor per quarter. Other jobs are excluded from only the overtime requirement. These include auto, truck and farm salespeople and parts clerks, railroad and air carrier employees, taxi drivers, movie theater workers and farm workers.
As of 2011, an exempt employee must earn at least $23,600 per year, or $455 per week. If the employee earns less, he may be considered nonexempt. Employees must generally meet this criterion in addition to pay basis and job duty criteria before they are considered exempt under the FLSA, unless they are in an excluded job.
Exempt employees must be paid a salary as opposed to a wage. Wages pay an employee a specific amount of money per hour worked. Salaries guarantee a minimum amount of money every week, regardless of the total number of hours worked. For an employee to be considered salaried, her base pay cannot decrease due to changing hours or quality of work. An employee can lose base pay for full workdays missed above the allowed leave time and still be considered salaried.
Any of three specific job duties must also be met for an employee to be exempt. These duties are executive, professional and administrative. Executive duties include supervising at least two employees, management as the primary duty and having input into hiring, firing, promoting and task assignments. Professionals include doctors, lawyers, teachers, clergy, dentists, accountants, architects and other learned professions. Creative professionals such as actors, writers and musicians are also exempt. Administrative duties are nonmanual office jobs that are directly related to general business operations and require independent judgment and discretion.