What is the difference between exempt and non-exempt employees?

Under the federal Fair Labor Standards Act, non-exempt employees must receive at least minimum wage and overtime pay, generally time and a half, for hours worked beyond 40 in a workweek. Exempt employees are excluded from that overtime requirement. To be exempt, an employee generally must be paid on a salary basis at or above a threshold set by the Department of Labor and must perform duties that fall within specific exemptions, primarily executive, administrative, professional, outside sales, and certain computer roles.

The persistent misconception is that being paid a salary or holding a managerial-sounding title makes someone exempt. It does not. Classification depends on the actual duties performed and the salary test, and misclassification, treating a non-exempt worker as exempt to avoid overtime, is a common and costly employer violation that generates significant back-pay litigation. A shift lead who mostly does the same work as the team, or a coordinator with a fancy title and no real discretion, is frequently non-exempt regardless of what the offer letter says. States add their own rules and often more protective standards, California's overtime and salary thresholds among them, and where federal and state law differ, the more protective one applies. If you suspect misclassification, the Department of Labor's Wage and Hour Division handles complaints, and state labor agencies do as well.