What is a non-exempt employee?

A non-exempt employee is a worker who is covered by the overtime and minimum wage rules of the Fair Labor Standards Act (FLSA).

Employers must pay a non-exempt employee at least 1.5 times the regular rate for each hour over 40 in a workweek. The FLSA treats every employee as non-exempt unless the job meets a legal exemption.

Most non-exempt employees are paid by the hour, but some are paid a salary. The pay method does not decide status. Independent contractors are a separate group, as the FLSA does not class them as exempt or non-exempt.

For the pay rules, read our overtime glossary page.

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

The main difference is overtime pay. Non-exempt employees must receive it, while exempt employees do not receive it, however many hours they work.

The DOL states that blue-collar workers are not exempt, however high their pay. First responders are also not exempt, whatever their rank or pay.

For the other side of this topic, read our guide to exempt employees.

How do you know if an employee is non-exempt?

To classify an employee, test three things: salary basis, salary level, and job duties. An employee is exempt only if the job passes every test. If any test fails, the employee is non-exempt and must receive overtime. State law may add stricter tests.

1. Check the salary basis. The employer must pay a fixed salary. Hourly pay fails this test. Some computer employees are an exception. They may be paid at least $27.63 per hour.

2. Check the salary level. The federal floor is $684 per week ($35,568 per year). A pay level below this floor means the employee is non-exempt.

3. Check the job duties. The main duties must meet an executive, administrative, professional, computer, or outside sales test. A job title does not count.

4. Check state law. If a state sets a higher floor or a stricter duties test, follow the state rule for work done in that state.

5. Record the result. If any test fails, classify the role as non-exempt. Review the role each year.

Outside sales employees, doctors, lawyers, and teachers have no salary tests. The duties test still applies. A separate path exists for highly compensated employees: They must earn at least $107,432 per year, including at least $684 per week, and perform at least one exempt duty.

What changed in 2026?

In 2024, the US Department of Labor (DOL) tried to raise the federal salary floor to $844, and then to $1,128, per week. Federal courts struck down the rule. In May 2026, the DOL formally restored the $684 figure. The DOL may raise the floor again in a future rule.

State salary floors for exempt employees in 2026

Six states set a higher floor than the federal level. An employee who passes the federal test can still be non-exempt under state law.

What are examples of non-exempt jobs?

Non-exempt jobs are roles that do not pass the exemption tests. Common examples are hourly roles in retail, hospitality, food service, manufacturing, and clerical support. The DOL also states that blue-collar workers are not exempt, however high their pay.

• Retail cashiers and sales associates

• Restaurant servers and line cooks

• Warehouse and production workers

• Construction workers, electricians, plumbers, and mechanics

• Receptionists and data entry clerks

• Employees in any role whose pay is below the federal or state salary floor

A role title alone does not decide status. A "manager" who does mostly routine work, or who earns less than the floor, is non-exempt.

Can a salaried employee be non-exempt?

Yes. A salaried employee is non-exempt when the job fails the duties test or the salary level test. The employer must still track hours worked. The employer must also pay overtime based on the employee's regular rate of pay.

Here is an example. A salaried assistant manager in Washington earns $50,000 per year. The job passes the duties test. The pay is below the Washington floor of $80,168.40. The employee is non-exempt, so the employer owes overtime for hours over 40 in a workweek.

An employer may also choose to class a role as non-exempt, even when the role could qualify for an exemption. In that case, the employer must follow every non-exempt rule for that role.

How does overtime work for non-exempt employees?

Non-exempt employees must receive overtime pay for hours worked over 40 in a workweek. The rate must be at least 1.5 times the regular rate of pay. The FLSA counts each workweek on its own, and it doesn't require overtime for weekends or holidays, as such.

The regular rate includes most pay for the week, such as shift differentials and non-discretionary bonuses. It is not only the base hourly wage. The employer must pay overtime on the regular payday for the pay period in which the employee earned it.

Overtime calculation example

An hourly employee earns $20 per hour and works 45 hours in one workweek.

The same rule applies to a salaried non-exempt employee. Divide the weekly salary by the hours the salary covers. This gives the regular rate. A $1,000 salary that covers 40 hours gives a regular rate of $25. If the employee works 46 hours, the overtime pay is 6 × $25 × 1.5, or $225. The total pay for the week is $1,225.

A fixed salary for a workweek longer than 40 hours does not meet the FLSA rules. The employer must still pay overtime.

Do state laws change overtime rules?

Yes. Some states set stricter rules than the FLSA. The employer must follow the rule that gives the employee more protection. California, for example, requires overtime for hours over eight in a workday, not only over 40 in a workweek. California and Maine also use a "more than 50 percent" duties test, not the federal "primary duty" test.

How should employers track hours for non-exempt employees?

Employers must keep accurate records of hours worked for every non-exempt employee. The FLSA does not require a specific method. A time clock, timekeeping software, or employee-entered time all work, if the records are accurate. Keep payroll records for at least three years and time cards for at least two years.

For each non-exempt employee, keep these records:

• Hours worked each workday and each workweek

• The time and day the workweek starts

• The regular hourly rate for any week with overtime

• Total straight-time earnings for the week

• Total overtime pay for the week

An employee may work extra hours without approval. The employer must still pay for work it knows about or allows. Write a clear overtime approval policy, and pay for all time worked.

How do remote work rules affect non-exempt employees?

The same wage and hour rules apply to remote non-exempt employees. State law follows the place where the employee does the work. A remote employee who moves to a new state can change which salary floor and overtime rules apply.

To stay compliant with a remote team, do these things:

1. Set clear work hours and meal and rest break rules in writing.

2. Require time entries for every shift, including short tasks after hours.

3. Approve overtime in advance, and pay for any unapproved overtime that employees work.

4. Track each employee's work state, and update records when it changes.

What happens if you misclassify a non-exempt employee as exempt?

If an employer wrongly classes a non-exempt employee as exempt, the employer may owe back overtime, an equal amount in damages, and legal fees. The FLSA lookback period is two years, or three years for willful violations. State law can reach back further.

Here's an example: A company hires a remote analyst in Washington at $60,000 per year and classes the role as exempt. The salary clears the federal floor of $35,568. It does not clear the Washington floor of $80,168.40. The role is non-exempt. The company owes overtime for every hour over 40 in a workweek.

The most common causes of misclassification are:

• Using a job title, such as "manager," instead of the duties test

• Paying a salary below the federal or state floor

• Paying a salary and assuming this makes the role exempt

• Missing a mid-year change to a state floor

• Missing a state change for a remote employee

Run a classification audit each year. Review any role after a pay change, a duty change, or a move to a new state.

How Deel helps you manage non-exempt employees

Wage and hour rules change by state, by year, and sometimes by month. A missed change can turn an exempt role into a non-exempt role. Deel is one platform for payroll, HR, benefits, mobility, and compliance in 150+ countries.

Deel's Continuous Compliance™ gives teams real-time alerts, risk warnings, and expert guidance on regulatory changes. Deel Payroll and Deel’s PEO support US employers. Deel's employer of record (EOR) service lets you hire employees in other countries without a local entity.

Can non-exempt employees be required to work more than 40 hours a week?

Yes. An employer may require a non-exempt employee to work more than 40 hours in a week. The employer must pay overtime for every hour over 40. Some states limit mandatory overtime, so check state law.

Do non-exempt employees get paid for breaks?

The FLSA does not require meal or rest breaks. Short rest breaks, usually 20 minutes or less, count as paid work time. A longer meal break may be unpaid if the employee is fully relieved of duty. Some states require breaks, so check state law. [Verify against Deel Compliance Hub.]

Is a non-exempt employee the same as an hourly employee?

No. Most non-exempt employees are hourly, but some are salaried. Status depends on the duties test and the salary level test. The pay method does not decide status.

Can an employer change an employee from exempt to non-exempt?

Yes. An employer may reclassify a role at any time. From the date of the change, the employer must track hours and pay overtime. If the old class was wrong, seek legal advice about back pay.

Can non-exempt employees work remotely?

Yes. The same overtime, minimum wage, and record rules apply. State law follows the place where the employee works. Set clear hours, require time entries, and approve overtime in advance.

Disclaimer: This content is for informational purposes only and does not constitute legal or tax advice. Regulations vary by jurisdiction and change frequently. Consult qualified legal or tax professionals for advice specific to your situation.