Exempt vs Non-Exempt

Definition

Legal employment classifications determining whether employees are exempt from overtime pay. A distinction that generates endless payroll confusion and occasional lawsuits.

Example Usage

Under FLSA regulations, our software engineers are classified as exempt from overtime requirements.

Origin

U.S. Fair Labor Standards Act (FLSA), established 1938

Fun Fact

Misclassification of exempt vs non-exempt employees is the #2 reason companies face wage-and-hour lawsuits

Source: Employment law and payroll compliance

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