Non-exempt employees are employees who, because of the type of duties performed, the usual level of decision making authority, and the method of compensation, are subject to all Fair Labor Standards Act (FLSA) provisions including the payment of overtime. Non-exempt employees are normally required to account for hours and fractional hours worked.
Non-exempt employees must be compensated for all hours worked overtime at the premium (time-and-one-half) rate of pay. All states have this requirement for overtime hours as a result of the FLSA and its FairPay revisions of August, 2004 which take precedence over state laws.
Much attention has been directed at the appropriate classification of non-exempt employees since these revised overtime rules were signed into effect. While many exempt employees, reclassified as non-exempt employees, gained the ability to earn overtime, others, such as team leaders who were considered non-exempt employees, lost their overtime pay eligibility as newly exempt employees.
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