Fundamental Payroll Certification (FPC) 2025 – 400 Free Practice Questions to Pass the Exam

The key distinction between exempt and non-exempt employees lies in their entitlement to overtime pay. Exempt employees are those who, under the Fair Labor Standards Act (FLSA), are not entitled to premium pay for overtime hours worked beyond 40 in a workweek. This generally includes certain professionals, executives, and administrative roles that meet specific criteria. Non-exempt employees, on the other hand, are entitled to overtime pay, which typically means they receive time and a half for any hours worked over 40 in a given week.

Understanding this classification is crucial not only for compliance with labor laws but also for proper payroll administration. It allows organizations to effectively manage employee compensation and ensure that workers are fairly compensated for their time, especially when they exceed standard working hours. While other statements may touch on aspects related to pay structures or work schedules, the defining factor regarding overtime eligibility is the core difference between these two categories of employees.