HR Glossary  /  Salaried Non-Exempt
Salaried Non-Exempt8 min read
Table of Contents:

What is a Salaried Non-Exempt? - HR Glossary

A salaried non-exempt employee is someone who earns a fixed salary but still qualifies for overtime pay if they work more than 40 hours in a workweek. This might sound a little confusing at first, especially since salaried employees are often thought to be exempt from overtime. But with salaried non-exempt workers, it's a different story. They may not be paid hourly, but they still have the right to overtime under the Fair Labor Standards Act (FLSA).

Getting the employee classification right helps employers stay compliant with labor laws and guarantees that employees are paid fairly for their work. Exempt versus non-exempt classifications are part of the rules set by the FLSA, which aim to protect workers and make sure they’re compensated properly for the hours they put in. And understanding these differences will help businesses avoid legal trouble and hold onto fair pay practices.

A salaried non-exempt employee is someone who receives a fixed salary but is still entitled to overtime pay when they work more than the standard 40 hours in a workweek. Essentially, they aren’t exempt from overtime laws, even though they have a set salary rather than an hourly wage.

For an employee to be classified as non-exempt under the FLSA, there are a few factors at play. First, they need to meet the salary threshold set by the FLSA, which means that they earn above a certain minimum amount each week. But that’s not all—job duties play a big role too. A salaried non-exempt employee's job needs to involve non-managerial or non-specialized tasks, which disallows them from being considered exempt.

Key Criteria Under FLSA

To be classified as salaried non-exempt, employees must earn a certain salary and perform duties that don’t fit the exemption rules. While their pay is fixed, their hours are tracked just like hourly workers. If they exceed 40 hours in a week, they’re entitled to overtime, which is usually 1.5 times their regular pay.

Examples of Common Roles

Salaried non-exempt employees can be found in various industries and roles. Take office managers, for example. In smaller businesses, office managers might still have hands-on tasks like customer service or administrative work that keep them from being classified as exempt, even though they receive a salary. Sales supervisors are another common example—they may be salaried, but their job duties often involve non-exempt work like managing customer accounts or doing paperwork. This makes them eligible for overtime. Similarly, IT support staff may work long hours fixing issues or meeting deadlines and would also qualify for overtime under the non-exempt category.

When it comes to salaried non-exempt versus salaried exempt employees, the main difference lies in overtime eligibility. In simple terms, salaried non-exempt employees can receive overtime pay when they work more than 40 hours a week, while salaried exempt employees are not. This is the most noticeable distinction.

Another difference is the pay structure and work hours. While both types of employees receive a fixed salary, exempt employees generally don’t track hours the same way non-exempt employees do. Exempt employees are expected to complete their job duties regardless of how many hours it takes, and their salary compensates them for this. In contrast, salaried non-exempt workers are still expected to work full-time hours but are compensated extra if they exceed the typical 40-hour week.

The responsibilities and job duties also vary. Exempt employees typically have higher-level responsibilities—think managerial or professional roles that require independent decision-making. Non-exempt employees, however, often perform more routine tasks that fall within set guidelines. For example, an office manager— and other similarly skilled workers— might be salaried non-exempt because they still handle administrative tasks or customer service on top of overseeing a team, which keeps them from qualifying as exempt.

Employees involved in an artistic or creative endeavor, such as graphic designers or writers who contribute to a broader project (think a web app, a YouTube channel, or a video game) may sometimes qualify for exempt status depending on their job duties, though many in these roles are still considered non-exempt if they don’t meet the criteria.

Exempt vs Non-Exempt Employee: What is the Difference? →

For salaried non-exempt employees, overtime is calculated based on their regular hourly rate, which can be determined by dividing their salary by the number of hours they’re expected to work in a typical workweek. For example, if an employee makes $1,000 a week and works 40 hours, their regular hourly rate would be $25. Any time worked over 40 hours would be paid at 1.5 times this rate—so $37.50 per overtime hour.

Different states may have specific rules when it comes to overtime for salaried non-exempt employees. While federal law sets the basic guidelines under the FLSA, some states have stricter regulations. For instance, in California, overtime rules can be more generous than federal standards, and employees might be eligible for overtime pay even if they work more than 8 hours in a single day, not just after 40 hours in a week.

There are also common misunderstandings when it comes to overtime. One key misconception is that employees paid on a salary basis are automatically exempt from overtime, but that’s not true for non-exempt employees. Another confusion is how to properly calculate overtime for salaried employees—many assume that salaried workers don’t have an hourly rate, but the law requires employers to determine that rate in order to calculate overtime correctly.

Benefits and Challenges of Salaried Non-Exempt Status

For employers, having salaried non-exempt employees can offer some flexibility. For instance, businesses can structure a big chunk of the compensation more predictably since the employee receives a fixed salary. This can help with budgeting and managing payroll. Conversely, tracking overtime hours for salaried non-exempt employees can become more complicated. Employers need to be sure that timekeeping is accurate, especially when employees work more than 40 hours in a week, and overtime calculations need to be consistent to steer away from compliance issues.

For employees, the benefit of salaried non-exempt status is the eligibility for overtime pay. This means they’re compensated for the extra hours they put in beyond the usual workweek. Additionally, salaried employees often have more predictable paychecks, which can be reassuring for those who prefer a stable income (and a good excuse to leave the office and go home when it's 5 p.m.)

Sure thing, there are challenges as well. One major issue for salaried non-exempt workers is the tracking of hours. It’s worthwhile for these employees to keep track of every hour worked, especially if they’re frequently going over 40 hours a week.

Without proper time tracking systems that automatically add the information to an employee profile, workers could be (accidentally!) compensated unfairly for overtime. From the employer’s perspective, holding up compliance with FLSA regulations and state-specific rules can call for additional effort than it would take to simply have one kind of worker arrangement.

Check TalentHR’s solutions for scaled teams →

Classifying employees correctly as exempt is an unavoidable thing to do if you want to maintain compliance with FLSA. Here’s how you can get it right:

Steps to Determine Exempt vs. Non-Exempt Status

First, you’ll need to look at the employee’s specific job duties. Keep in mind: exempt employees typically hold positions that involve managerial, executive, or specialized tasks requiring discretion and independent judgment. Non-exempt employees, on the other hand, generally perform more routine, manual, or clerical tasks.

The next step is to assess the employee’s salary. To be classified as exempt, employees must earn above the federal minimum wage threshold set by the FLSA, which is currently $684 per week—and the total annual salary requirement for highly compensated employees is $107,432 annually. Non-exempt employees can be salaried but are still entitled to overtime pay.

Finally, consider the number of hours worked. For salaried non-exempt employees, you need to track hours and make sure they receive overtime when they exceed 40 hours in a workweek.

Common Pitfalls

A common mistake is assuming that salaried employees are automatically exempt. Just because an employee earns a salary doesn’t mean they don’t qualify for overtime. Another mistake is relying only on salary without considering the employee’s job duties. A “manager” title doesn’t automatically make someone exempt—they need to meet specific criteria regarding their responsibilities.

Also, be mindful of state-specific wage and hour laws, which may have stricter requirements than federal guidelines. What works under FLSA may not always align with state rules, so be aware of these differences.

Benchmarks

When classifying employees, always use job duties as your first benchmark. The salary threshold is a solid starting point, but it’s the employee’s daily responsibilities that will truly guide the classification.

Check that salary levels and job duties align with FLSA and state-specific regulations to avoid misclassification. The easiest way to keep classifications tidy and working is with HR software that can create profiles for each staff member.

Managing those “salaried non-exempt employees” (a hard phrase to read out loud) can be a hard task, between tracking hours and overtime. But technology can help make the process much easier.

HR software solutions can automate much of the process of time tracking in a way that guarantees salaried non-exempt employees’ hours are tracked accurately. Tools like TalentHR help HR teams maintain compliance with FLSA rules and guarantee that overtime is calculated properly.

Benefits of Automated Systems like TalentHR

Using automated systems like TalentHR offers several benefits, such as keeping detailed records of workers so that HR and payroll can know which categories they belong to. HR software can also assist with record-keeping, which is important in the case of audits or compliance checks. Generally speaking, these tools save time and downplay the risk of mistakes that could lead to costly fines (or disgruntled workers).

What industries typically employ salaried non-exempt workers?

Salaried non-exempt workers can be found in a mixed bag of industries. Common sectors include hospitality, healthcare, retail, technology, manufacturing, and education. For example, in healthcare, roles like medical office managers or nurse supervisors may be salaried but non-exempt. In retail, assistant managers and department heads often fall under this category. But it is quite common for businesses to pay non-exempt employees by the hour instead of a salary, because the latter means a lot more work. That's why the idea of “salaried non-exempt” is also disorienting.

Tech companies might classify certain support staff, like IT technicians, as salaried non-exempt, but it depends on their job duties. Essentially, any industry where employees are in positions that require specialized skills or supervision but still perform hourly tasks can have salaried non-exempt workers.

What happens if an employer misclassifies an employee as exempt instead of non-exempt?

Misclassifying an employee as exempt instead of non-exempt can lead to serious consequences for employers. If an employee who should be non-exempt is classified as exempt, the employer may fail to pay overtime, which is a violation of FLSA regulations.

Employees can file complaints with the Department of Labor, that leads to audits, fines, and back payments for unpaid overtime. Additionally, employees who are misclassified might take legal action, which only adds to the financial and reputational harm done to the employer. Start by getting legal or tax advice to make sure you pay non-exempt employees correctly and keep your mind at ease.

Are bonuses included in the overtime calculation for salaried non-exempt employees?

Yes, bonuses are generally included in the overtime calculation for salaried non-exempt employees, but it depends on the type of bonus.

If an employee receives a non-discretionary bonus—for example, a performance bonus or sales commission—that bonus must be factored into their regular rate of pay when calculating overtime. Meanwhile, discretionary bonuses, such as holiday or occasional bonuses, aren’t included in the overtime calculation.

Cut the clutter in HR tasks, and grow
your business faster