Workers in the United States can either be labeled as exempt or nonexempt based on the details of their employment. These two statuses signify whether an employee receives hourly pay or if they earn a yearly salary. The Fair Labor Standards Act (FLSA) oversees these two employment types and makes many other distinctions between the two.

What are the differences between exempt and nonexempt?

One of the main differences between salary and hourly workers is earning overtime pay. Hourly employees can make extra money for working more than 40 hours in a week. Additionally, this type of worker often has to use timesheets to record their hours. Salaried employees generally obtain benefits through their employers, as well. This can include paid time off and health insurance.

What are the qualifications for a salaried employee?

For your company to designate you as exempt, there are federal requirements that must be met. Beginning in January 2020, federal law will state that all salaried employees must make at least $35,568 annually. Additionally, these workers cannot receive payment on an hourly basis and must use independent decision-making skills regularly.

California has more lenient laws for employees when compared to federal regulations. In this case, you would be subject to state guidelines because they are more beneficial to you. California requires salaried employees to receive more than double the minimum wage. This means you need to make at least $54,080 each year.

While rare, a salaried employee can be nonexempt if their job requirements do not meet the definition of an exempt employee.

It is beneficial to ask an attorney for guidance, if your employer misclassified you or if you have any questions. They will understand your state’s laws and can thoroughly explain them to you.