Juan from Miami wrote in and said, “I’m graduating in the spring and I got an offer for a salary exempt positon. It’s a good salary but why is it exempt, exempt from what? I asked my professor what exempt was, and he just said, exempt position is just a salary job, is this correct?”
Yes, exempt vs non-exempt employee positions can be a little confusing because of the terminology is similar.
The key here is exempt vs nonexempt is the legal difference between overtime pay vs no overtime pay. So an exempt is just that, exempt from the federal legal statue requiring employers to pay 1.5 times overtime for hours worked over 40 hours. Salary positon are exempt from this law and that is where this term comes from.
Now employers can’t just randomly choose whether to classify a position exempt or non-exempt. There are federal guidelines that determines what is and what is not exempt.
Salary exempt jobs are often executive level, professional level, and out of office or traveling professionals, and so forth. These were initially setup under the Federal Labor Standards Act and amended with the Equal Pay Act to ensure that hourly workers were compensated for hours worked over 40hrs.
Exempt positions are not compensated for overtime. You have a contract with an employer that says for a give task you will be paid a specific amount. Now some employers will pay straight-time over 40 as a means to compensate those employees that maybe working with non-exempt employees to keep the appearance and uphold moral within the business. But this is depending on each employer’s policies and any state laws.