The non-exempt classification is based on the type of work an employee performs and how they are paid for that work. Proper classification of such employees is crucial for employers to avoid costly legal consequences.
Non-exempt employees are typically hourly workers who are paid for the actual hours they work. The non-exempt classification applies to most hourly workers, such as customer service representatives, manual labor employees, clerical staff, and entry-level employees. It is possible to have a salaried non-exempt employee but hours will still need to be tracked and overtime must be paid the same as hourly workers.
The employees in a non-exempt role are entitled to receive at least the federal minimum wage, which is currently set at $7.25 per hour. In addition, non-exempt employees are entitled to receive overtime pay at a rate of 1.5 times their regular hourly rate for any hours worked over 40 hours in a workweek.
All hours worked by non-exempt employees must be tracked accurately and consistently. The hours worked should be reflected on each paystub so that an employee can audit their timesheet. The employee’s pay stub should break down business hours and overtime hours worked in each pay period.
While non-exempt employees are owed overtime pay for hours worked, companies are free to set policies that prohibit overtime or set boundaries about how much overtime an employee can accrue. The policy should be clear about the schedule non-exempt employees should stick to during the week. If employees continue to accrue overtime after the policy has been rolled out the employer can discipline and terminate, if necessary.