what the hell is all this talk of exempt and non-exempt about?

This comes up a lot, so here’s a quick explanation:

In the U.S., all workers are classified as exempt or non-exempt.

Non-exempt workers must be paid overtime (time and a half) for any hours over 40 they work in a single week.

Exempt workers are exempt from overtime requirements — but they must be paid the same salary every week, if they worked any portion of it, with a few narrow exceptions. (See below.)

Most importantly, whether you are exempt or non-exempt isn’t up to your employer; it’s determined by how the government classifies the type of work you do. To be exempt, you must earn a salary of at least $35,568 and perform relatively high-level work as your primary duties. Specifically, in addition to the salary test, you must meet one of the following criteria:

  • You’re a “learned professional.” Lawyers, doctors, dentists, registered nurses, accountants (but not bookkeepers), teachers, architects, engineers, scientists (but not technicians), pharmacists, actuaries, and clergy meet this criteria, as does anyone else whose work is “predominantly intellectual, requires specialized education, and involves the exercise of discretion and judgment.”*
  • You’re a “creative professional,” like an actor, musician, composer, writer, cartoonist, or in some cases a journalist.
  • Your primary duty is managing the business or a part of the business and you manage at least two people.
  • You do work directly related to management or general business operations that involves the exercise of independent judgment and discretion about matters of significance. This refers to relatively high-level employees whose primary job is to keep the business running (such as HR, finance, marketing, PR, and legal) and who have the authority to make independent decisions on significant matters.
  • You’re a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field whose primary work meets the requirements here.
  • Your primary duty is sales and you regularly work away from your employer’s place of business.

* Teachers, doctors, and lawyers are always exempt, even if they don’t earn at least $35,568.

You can read more about these exemptions here.

Here is something key: If you are exempt, you are supposed to be paid on a salary basis. If your employer docks your salary based on the hours you work in a given week — or if they otherwise treat you as non-exempt — they can lose the exemption for your position and suddenly owe you back pay for any overtime hours you might have worked in the past. In plain English: If they dock your pay for working fewer hours in a week, they must pay you overtime when you work more than 40 hours in a week.

(There are some exceptions to this though; they can deduct for full-day absences when you’re out for personal reasons or sickness if they have paid sick leave and you’ve used it up. They cannot deduct for partial-day absences unless it’s your first week of work or your last week of work.)