Key Terms
- Exempt: An exempt employee is paid on a salary basis (a predetermined amount of money for work performed, regardless of the hours actually worked) and is not required to track time worked.
- Non-exempt: A non-exempt employee is paid based on actual hours worked, and is required to track all time worked and be paid overtime for time worked in excess of 40 hours in a workweek.
What is the Fair Labor Standards Act (FLSA)?
The Fair Labor Standards Act (FLSA) is the federal wage and hour law administered by the U.S. Department of Labor (DOL). The purpose of the FLSA is to establish minimum wage, overtime pay, recordkeeping, and youth employment standards affecting most full-time and part-time workers.
Employees are either “exempt” or “non-exempt” from the FLSA regulations. This designation indicates eligibility for overtime pay when overtime is worked. The FLSA requires employers to pay their employees overtime (one and one-half times the employee’s regular rate of pay) for all hours worked over 40 in a workweek unless they meet a minimum pay requirement and their job duties meet specific criteria to be “exempt” from overtime.