The main difference is that nonexempt employees are subject to minimum wage and overtime pay, among other requirements, while exempt employees are not. The Fair Labor Standards Act (FLSA) and various industry, local and state laws and regulations establish criteria for minimum wage and overtime pay. Certain employees may be designated as exempt from minimum wage and overtime pay under administrative, professional, executive, computer or outside sales exemptions, among other potential exemptions, if they satisfy both a job duties test and a salary basis test. There may be other requirements that must be met for nonexempt employees depending on the work location and industry, such as providing compliant meal and rest breaks.
Fact Sheet 17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA) outlines the federal criteria for each of the white-collar exemptions under which an employee may be designated under the FLSA. Different exemptions and criteria may apply at the industry, local, or state levels.
TriNet provides its customers with a tool to assist them in conducting individualized risk assessments prior to making final FLSA status determinations for their employees.