When you are given an offer letter, you may be quick to sign on the dotted line after salary has been negotiated, but there are a few other items in that letter that are important for you to read through and understand.
One of the biggest is the difference between an exempt and non-exempt employee. Let’s break it down:
The status of an exempt employee is often thought of as a job that isn’t paid overtime. Although that can be true (and usually is), it’s not technically correct. There is a little more that goes into being eligible for exempt employment status. Certain requirements set by the Fair Labor Standards Act (FLSA) and individual states need to be met.
In order to for a role to be eligible for exempt status the job must:
- Meet the salary requirements set by the FLSA (this number changes from year to year, but in 2020, it is set at $648 per week or $35,568 per year)
- Must be paid a salary
- The position itself must be a high-level responsibility position within the company. Executive-level positions, administrative roles, or a job that uses a specified professional skill all fall into this category.
See the full list of exempt job duty categories
If that was a little too technical, it can help to think about an exempt employee this way: When you are an exempt employee, your employer is paying you for your services and skills and not necessarily your time.
Some businesses do provide their exempt employees with overtime pay, but these employees are still exempt even though offering overtime to your exempt employees not required.
Non-exempt employees, on the other hand, are eligible for overtime pay and hourly wages. Once an employee works their 40 hours, an employer must pay them overtime, per the FLSA.
You might think, “Well, if I am not going to get overtime, why would I want to be an exempt employee?”, but benefits are about more than just monetary compensation.
Typically, exempt positions are higher-paying positions and they usually come with perks of gaining technical experience. These positions also tend to be less physically demanding—although there definitely are exceptions to this rule. There may even be some performance bonuses as well, so it’s important to ask the right questions, think about the benefits of a position/company as a whole, and put the position in the context of your career.
At the end of the day, it is important you are selecting a job that is the best fit for you. Now that you know the difference between an exempt and non-exempt employee, you can feel a little more confident about what the format of your new role will look like.
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