Exempt vs. Non-Exempt: Who Qualifies for Overtime Pay?

If you work more than 40 hours in a workweek, you may be entitled to overtime pay—at a rate of at least one and a half times your regular hourly wage—for every hour worked beyond 40. However, not all employees qualify for overtime. If you are classified as an exempt employee, you are typically not entitled to overtime pay. In contrast, non-exempt employees are eligible for overtime, whether they are paid hourly or receive a lower salary that does not meet exemption requirements.

If you’re unsure about your classification or believe you’ve been denied overtime unlawfully, speak with an experienced employment lawyer as soon as possible.

What Is the Difference Between an Exempt and a Non-Exempt Employee?

The key difference lies in the protections provided by the Fair Labor Standards Act (FLSA). Non-exempt employees are covered by FLSA rules for overtime pay and minimum wage, while exempt employees are not, provided they meet specific criteria.

Most exempt employees:

• Are paid a fixed salary (not hourly),
• Earn above a minimum salary threshold, and
• Work in executive, administrative, professional, outside sales, or certain computer-related positions.

The Department of Labor (DOL) provides a duties test and a salary test to determine whether an employee qualifies as exempt. As of July 1, 2024, the minimum salary for exempt status is $844 per week ($43,888 annually). This threshold will increase again on January 1, 2025, to $1,128 per week ($58,656 annually).

Non-exempt employees, on the other hand, do not meet these exemption criteria. They are entitled to overtime pay when they work over 40 hours in a week. If salaried but non-exempt, the regular hourly rate is calculated by dividing total weekly pay by the number of hours worked that week.

What Happens if You Are Misclassified?

When employers fail to properly classify employees, the consequences can include:

• Fines and penalties.
• Regulatory enforcement actions.
• Employee lawsuits for unpaid wages and overtime.
• The need to retroactively compensate workers for overtime.

Employees who are misclassified as exempt may lose out on significant compensation.

What Are the Main Categories of Employees Who Are Exempt from Overtime Pay?

To be classified as exempt under the FLSA, employees must meet both salary and duties requirements. The following are the primary exempt categories:

Executive Employees

• Must have a primary duty of managing the business or a department.
• Must supervise at least two full-time employees.
• Must have the authority to hire/fire or significantly influence employment decisions.
• Must earn the minimum salary threshold and be paid on a salary basis.

Administrative Employees

• Perform office or non-manual work related to the management or general business operations of the employer or customers.
• Must regularly use independent judgment and discretion in significant matters.
• Must be salaried and meet the minimum salary threshold.

Note: New Jersey law may have additional criteria for administrative workers. Consult a state-specific attorney for local guidance.

Professional Employees

• Perform work that is primarily intellectual and requires advanced knowledge, usually acquired through prolonged education (e.g., doctors, lawyers, engineers).
• Includes creative professionals and certain computer professionals.
• Must exercise discretion and judgment, and be paid on a salary basis above the DOL threshold.

Other Exemptions

There are additional exemptions recognized under federal or state law, including:

• Outside sales employees.
• Certain computer-related employees are paid hourly at a DOL-approved rate.
• Casual babysitters or companions for the elderly under the domestic service exemption.
• Some employees at seasonal camps or nonprofit educational conferences.
• Full-time students working for their college may earn a wage below the federal minimum under specific DOL-approved programs.

Note: “Most minors” are not automatically exempt from wage protections, though they are subject to additional child labor restrictions.

What Should I Do If I Have Been Misclassified?

If you suspect your employer has incorrectly classified you as exempt, you should:

• Raise the issue with your manager or the human resources department.
• Keep detailed records of your hours worked, pay stubs, and job duties.
• If the issue is not resolved, consult an employment law attorney to evaluate your case and, if needed, help you file a wage claim.

Misclassification—whether intentional or accidental—can deny you significant earnings. You may be entitled to backpay, overtime compensation, and damages.

South Jersey Overtime Lawyers at The Gold Law Firm P.C. Represent Clients in Wage and Hour Disputes

If you believe you have been misclassified or denied the overtime wages you are legally owed, the South Jersey overtime lawyers at The Gold Law Firm P.C. are here to help. To schedule a free consultation, call 215-569-1999 or contact us online. We serve clients throughout South Jersey, including Cherry Hill, Haddonfield, Marlton, Moorestown, and Mount Laurel, from our offices in Philadelphia and Pennsauken, New Jersey.