The Fair Labor Standards Act (FLSA) creates two categories of employees. FLSA non-exempt employees are subject to FLSA requirements and must be paid for all hours worked, including overtime. FLSA-exempt employees are not subject to FLSA pay requirements and do not need to be paid for overtime.

What is the Fair Labor Standards Act?

The Fair Labor Standard Act is a federal law that governs minimum wage, overtime pay, payment recordkeeping, and employment standards for minors. It applies to all private-sector employees, as well as employees of local, state, and federal government agencies.

Why Does FLSA Non-Exempt Matter for Employers?

Your employees may be classified as FLSA non-exempt or exempt based on whether they are subject to FLSA requirements around pay (if they are non-exempt) or not (if they are exempt).

FLSA non-exempt employees are paid by the hour and must be paid extra for any overtime worked on top of their normal hours. Payment for non-exempt employees must strictly follow FLSA requirements.

FLSA-exempt employees are paid a salary and do not need to be paid for overtime. They earn the same amount of money no matter how many hours they work. Employees’ situations must pass several tests in order to be classified as FLSA exempt.

Misclassifying employees can lead to lawsuits and reflects poorly on your company’s treatment of its employees. It is essential to classify the correct employees as FLSA non-exempt in order to remain in compliance with federal and state laws.

Pay Requirements for FLSA Non-Exempt Employees

The FLSA has several requirements for the hours and pay of non-exempt employees.

Minimum Wage. First, the FLSA requires that employers pay a minimum wage of $7.25 per hour. This is often referred to as the federal minimum wage. Many states have their own higher minimum wage requirements, which employers are required to follow, so make sure you know your state rules as well as FLSA policies.

Compensable time. Second, the FLSA defines hours worked, also known as compensable time. Hours worked include all hours during which an employee is required to be at a specific workplace, whether that is at their employer’s office or at a specific job site. Hours worked also include any hours during which an employee must be on duty. The FLSA requires that employees be paid for all work that meets these criteria.

Overtime. Finally, the FLSA requires that employees be paid overtime if they work more than 40 hours in a single week. Importantly, overtime hours must be paid at a rate of at least 1.5 times the employee’s standard hourly wage. The FLSA does not put a cap on how many overtime hours employees over 16 years old can work, but it does limit overtime hours for minors under the age of 16.

How to Determine if an Employee is FLSA Non-Exempt

Any employee can be classified as FLSA non-exempt. However, non-exempt status can be burdensome for employers and may result in paying higher compensation to an employee than you would if they were classified as FLSA exempt. For instance, an employee with a high hourly wage who often works overtime could end up making more than a salaried employee putting in the same amount of hours. 

So, it is often advantageous to classify employees as FLSA exempt when you’re legally permitted to do so.

There are three tests to determine if an employee can be classified as FLSA exempt. If an employee does not pass all three tests, they must be classified as FLSA non-exempt.

Test 1: Salary Level

FLSA-exempt employees must be paid at least $684 per week or $35,568 per year. If an employee earns less than this amount, they must be classified as FLSA non-exempt.

Test 2: Salary Basis

FLSA-exempt employees must receive consistent pay regardless of the number of hours they work. That is, an employee must earn the same weekly wage regardless of whether they work 20 hours or 60 hours. This is typically the case for salaried employees.

If the amount an employee is paid depends on the number of hours they work, they must be classified as non-exempt. This is typically the case for hourly employees.

Test 3: Duties

The FLSA lists several categories of employees who may qualify for exempt status.

  • Executive employees: Employees who are responsible for managing the business or a department. They must regularly manage at least two full-time employees and must play a role in hiring or firing employees.
  • Administrative employees: Employees who perform non-manual office work related to business operations and must use independent judgment to carry out duties.
  • Professional employees: Employees who perform intellectual work that requires advanced knowledge in a particular field. Professional employees include creative employees, doctors, lawyers, teachers, scientists, and others.
  • Outside sales employees: Employees who regularly work outside of the employer’s main office and whose primary duty is engaging with customers to make sales.
  • Computer employees: Employees who work on duties such as software programming, data analysis, software design, or other skilled computer-based tasks.

If employees do not meet all of these three criteria, they must be classified as FLSA non-exempt. When in doubt, consult with a compensation attorney to determine whether an employee falls into one of these exemption categories.


FLSA non-exempt refers to hourly employees who must be paid according to the rules laid out by the Fair Labor Standards Act. FLSA non-exempt employees must be paid a minimum of $7.25 per hour, must be paid for all hours worked, and must be paid overtime at a higher rate than their normal wage when working more than 40 hours per week. Any employee can be classified as FLSA non-exempt, but employees must pass three tests in order to be exempt from FLSA requirements.