When it comes to classifying employees, there are two basic types that workers fall under: exempt or nonexempt. One of the most significant differences between the two categories is eligibility for overtime pay. Employers are required to pay nonexempt workers at least one and a half times the regular rate of pay for work performed over 40 hours in a workweek. Exempt employees are not required to be paid overtime, though certain salary and job duties criteria must be met.
It is crucial to follow the Fair Labor Standards Act (FLSA) and U.S. Department of Labor (DOL) regulations governing whether an employee is exempt from overtime because misclassifying a worker has serious repercussions for employers. As with most laws affecting the employer-employee relationship, the FLSA and its classification rules are complex, and the official guidance changes over time.