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Understanding Exempt vs. Non-Exempt Employees: A Comprehensive Guide

UPDATED 07/14/2023

Understanding the differences between an exempt and non-exempt employee is essential to your practice. New legislation evolves, and healthcare employers need to understand what rules take effect.

Table of Contents

What is the Fair Labor Standards Act (FLSA)?

Passed in 1938, the FLSA is a federal law that ensures workers have enough protection against pay practices and work regulations that are unfair. The FLSA creates standards for the federal minimum wage, overtime pay, child labor regulations, and other labor standards to protect employees. 

An example of protection against unfair practices includes preventing unequal pay such as women receiving less pay than men. Being made to work unreasonable and excessive hours is also a violation of FLSA rules. Lack of pay for working overtime falls under FLSA violations. Unsafe working conditions is another example of violating FLSA rules. 

Exempt vs. Non-Exempt Status

Employers need to follow federal regulations, but state laws often apply to employee exempt vs. non-exempt status. Employers must know and comply with both state and federal regulations. Being aware of state and federal exempt regulations is essential to your healthcare practice. 

FLSA regulations define employees as two categories of exempt and non-exempt. Correctly classifying your employees according to state and federal regulations can help you avoid compliance problems. Correct employee classification means you pay your employees fair wages, have consistent standards for leave and pay at least the minimum wage according to federal, state, and local law. 

Contact an HR software solution provider to keep exempt and non-exempt categories coordinated.

Recommended Reading: Non-Exempt Employee vs. Exempt Employee

Exempt Employees

The determination of exempt vs. non-exempt status is by how much an employee earns, what their job duties areas well as responsibilities. Exempt employees are usually paid a salary and it must meet the minimum federal/state standards. The FLSA has qualifications for exempt employees under labor laws. One is that the employee must have a salary that meets the minimum federal threshold instead of working on an hourly basis. A second criterion is the employee must have a minimum FLSA salary. Currently, the minimum FLSA exempt salary is at least $684 per week or $35,568 per year. 

Another criterion relates to the roles and responsibilities an employee has with specific job duties. The job title is not of importance - the job duties performed are what matter. When an employee is exempt, their pay remains the same regardless of how many hours they work even if they work less than an eight hour day.

Exempt Job Categories

Exempt status covers several job roles and responsibilities. Usually, these exempt statuses are administrative, executive, creative, sales, and highly compensated employees. The roles are:

Executive Exemption

Executives must have a role in managing a practice or a subdivision of a practice. An executive must supervise at least two employees and have the authority to hire, promote, advance, or change the status of other employees including dismissing employees. The CEO of a hospital would be an exempt employee under FLSA regulations.

Administrative Exemption

Administrators must perform work related to business operations or management. Some administrator responsibilities include coordinating office activities and operations, non-manual work and supervising administrative staff. A bookkeeper is an example of an administrator employee. 

Professional Exemption

The professional exemption has two categories: learned professionals and creative professionals. Learned professionals perform work based on advanced knowledge. Creative professionals have job duties related to talent, imagination, or invention. For a healthcare practice, the category of learned professional applies to medical staff such as doctors or nurses.

Outside Sales Exemption

Outside sales employees are those who obtain contracts or orders from clients or customers. They must be away from an employer’s place of business consistently to be exempt. Salespeople who earn commissions are exempt. A medical device salesperson qualifies for exempt status.

Highly Compensated Employees

Office employees whose responsibilities include non-manual labor qualify for this exemption. Their exemption roles should be executive, administrative, or professional roles to qualify. A nurse administrator, for example, would qualify for exempt status.

Non-Exempt Workers

The FLSA usually bases non-exempt status on hourly employment. Employment such as dental assistants, front desk workers, hygienists, and scheduling coordinators are examples of non-exempt roles. Employees with these roles and responsibilities are entitled to overtime pay beyond the number of hours they work and federal minimum wages. Paramedics, ambulance personnel, and first responders are also in the non-exempt category.

State Exemptions from Overtime

Some states have their own salary and responsibilities criteria for exempt vs. non-exempt employees. As of January 1, 2022, changes in five states took effect for the minimum salary requirements for overtime exemption. The states are:


Administrative, professional, and executive employees must meet salary and responsibilities qualifications for exemptions in California. These individuals must be paid at least twice the state minimum hourly wage when based on a 40-hour week. 

For exemption, employers with 26 or more employees must pay a weekly salary of at least $1,200 per week to qualify for the exemption. For weekly salaries, employers with fewer than 26 employees must pay at least $1,120.Colorado

According to the Colorado Overtime & Minimum Pay Standards Order, the minimum salary to qualify for executive/supervisor, administrative, and professional exemptions increases to $865.38 per week (hourly rate of $28.92). 

However, an exempt employee’s salary should also be enough to satisfy the minimum wage for all workweek hours. FLSA regulations define a workweek as a consecutive seven-day period of time. Employers should consult legal counsel about how this rule may affect their practice.


For exemption statutes, administrative, professional, and executive employees in Maine should receive a salary that exceeds 3000 times the state minimum wage. Exemption salary from overtime law is $735.59 per week for administrative, professional, and executive employees.

New York and New York City

In New York, executive and administrative employees must have the minimum salary requirement at 75 times the state minimum wage. The minimum wage differs based on state region. For example, on December 31, 2021, the minimum wage increased in every state region except New York City. The minimum salary required for executive and administrative exemptions increased in Nassau, Suffolk, and Westchester Counties at $1,125 per week. 

For the remainder of the state, the rate will be, except for New York City, a proposed $990 per week. Professional exemptions are allowed under state law. For professional exemptions, there are tests for responsibilities, and job duties must meet specific criteria, but no minimum salary requirement for state law. 

However, federal law establishes a minimum salary level of $684 per week for professional exemptions. Employers classifying professional exemptions should ensure employees meet federal and state exemption eligibility. While this may seem confusing, contacting an HR software solution provider can be useful to keep these disparate exemptions organized.

Washington State

In Washington state, employees in Washington must earn a salary of at least 1.75 times the minimum wage for a 40-hour workweek. The state’s minimum wage increased on January 1, 2022. The minimum salary required for executive, administrative, and professional overtime exemptions increased to $1,014.30 per week (hourly rate of $50.72). Employers who hire computer professionals by the hour must pay at least $50.72 per hour on a salary basis if at least $1014.30 per week for employee overtime exemption.


Employers must always be aware of new legislation about FLSA regulations. Being aware of new legislation and updating your exemption classifications as well as your human resources materials keeps you in legal compliance for overtime exemptions. 

For example, the U.S. Department of Labor (DOL) under the Biden Administration is planning to update the overtime rule in 2022. The DOL has announced its intention to review and update FLSA regulations about the overtime threshold. Long overdue, the proposed update will occur in April 2022. Changes to the threshold will determine FLSA exemption. The DOL will include in its review whether the FLSA should have regular and automatic updates to the overtime threshold. 

For employers, this change will mean recalculating the exemption statuses of all their employees who are under the new regulations. Familiarize yourself with any new legislation about the FLSA and upcoming overtime provisions. Contact an HR software solution provider to help you follow and comply with updated regulations.


Check Your Compliance for Exemption Status

With new legislation come new challenges and opportunities for you as an employer and as a practitioner. Reviewing your employee classifications is important to ensure you appropriately categorize your employees into exempt vs. non-exempt statuses. Check federal and state laws to comply with laws and update your employee handbook for rules concerning exempt and non-exempt employees. 

free download for employee handbook

Recommended Reading: Why You Need an Employee Handbook Instead of a Template


Before classifying and treating any employee as overtime-exempt, employers should confirm the employee satisfies the relevant tests for overtime exemption under federal and state laws. Consult with HR and/or legal counsel if you are uncertain about employee exempt status.

About HR for Health

HR for Health is an all-in-one HR software solution dedicated to helping the dental, optometry, and veterinary industries. Our human resources platform features all the tools practice owners need to manage payroll, timekeeping, 401(k), and more with total integration and ease.