An exempt employee is considered to be exempt from overtime. Only certain types of employees are exempt: managerial, supervisory, and professional employees. Exempt employees are salaried; that is, they are paid annually. They do not have to be paid overtime, like hourly employees.
Classifications of exempt employees
In order to be classified as "exempt," an employee must have specific types of job duties. The Fair Labor Standards Act (FLSA) recognizes executive, administrative, professional, outside sales, and some computer employees as exempt. Exempt classification is on a case-by-case basis and is not based on the job title of the employee. Just calling someone a "Manager" does not make him or her exempt.
Exempt employees are usually paid on a salaried basis. That is, they receive an annual salary, distributed among the number of pay periods in a year. Exempt employees do not receive overtime; they work the number of hours required for the job. An exempt employee receives the same salary every pay period; the salary is not reduced for fewer hours, performance, days off set by the employer, In other words, if the employee is able to work, he or she must be paid, even if there is no work to do.
Exempt employees must receive a minimum salary, set by the FLSA as the equivalent of $455 an hour, based on 2080 hours (a standard work year (40 hours a week 52 weeks a year).
All exempt employees are salaried, but not all salaried employees are exempt.