Identification

• An employer should carefully examine FLSA guidelines regarding nonexempt and exempt status before labeling the employee as such. The act narrowly defines exemptions; the employer should consult with the Wage and Hour Division if unsure of the employee's status. In general, a nonexempt employee is not excluded from FLSA overtime requirements -- she is eligible for overtime pay, if worked. An exempt employee is excluded from the act's overtime criteria -- the employer does not have to pay overtime to an exempt worker. The FLSA applies to employees who are covered under the act, such as those who work for a federal or state agency or a business that generates yearly revenue of $500,000 or more.
  
  

Exempt Requirements

• The employer cannot label the employee as exempt because it does not want to pay him overtime. The employee must meet FLSA income and/or job duties tests to qualify for exempt status. Most salaried employees are exempt, but an employee can be salaried/nonexempt if she does not meet FLSA exempt requirements but receives payment on a salary basis. A salaried employee is exempt if she meets the salary level and job duties test specific to her position. For example, executive, professional and executive employees who receive a minimum salary of $455 per week and perform duties as defined by the FLSA are salaried-exempt.
  
  

Nonexempt Critieria

• Most hourly employees are nonexempt, but an employee can also be hourly and exempt, such as an academic schoolteacher, physician and some computer professionals. Under the FLSA, nonexempt employees are entitled to overtime pay at one and one half times their hourly pay rate for work hours exceeding 40 for the week. The employer does have to pay hourly exempt employees overtime. A salaried-nonexempt employee receives overtime pay if she works overtime hours.
  
  

Payment

• An hourly employee receives payment according to hours worked during the pay period. A salaried employee receives full salary, regardless of hours or days worked. Salary can be a portion of the employee's pay or all of it; however, it must be a guaranteed minimum amount that she can count on each payday. The employer doesn't have to pay full salary for weeks in which she does no work. It can also deduct salary in permissible cases, such as unpaid disciplinary suspension, overuse of benefit days and to offset payments for jury duty.
  
  

Timekeeping

• An employer can require both exempt and nonexempt employees to clock and in and out on a time clock. Many employers do not require exempt employees to use a time clock since most are paid on a salary basis, but the employer can require it for tracking purposes.
  
  

Considerations

• An employer should check with its state labor department for its state labor laws. The state may have additional benefits or requirements for nonexempt and exempt employees.