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In any workplace, there are two types of employees: exempt and nonexempt. Exempt employees are those who are exempt from minimum wage and overtime pay requirements. This is because exempt employees are paid a salary rather than an hourly wage, and they work in what are considered executive or professional jobs.
Depending on the jurisdiction, an employment letter is sometimes known as an: employment contract, offer letter, employment verification letter, or a proof of employment document. But they all exist for the same reason. If you're an employer, the employment letter is used to formalize the hire.
An exempt employee is not entitled overtime pay by the Fair Labor Standards Act (FLSA). These salaried employees receive the same amount of pay per pay period, even if they put in overtime hours. A nonexempt employee is eligible to be paid overtime for work in excess of 40 hours per week, per federal guidelines.
With few exceptions, to be exempt an employee must (a) be paid at least $23,600 per year ($455 per week), and (b) be paid on a salary basis, and also (c) perform exempt job duties. These requirements are outlined in the FLSA Regulations (promulgated by the U.S. Department of Labor).
Do not require an employee to sign the offer letter, even if such signature is a mere acknowledgement of receipt of the offer letter. Instead, state an expectation to see the employee on his/her first day of employment.
Some important details about an offer letter are: It is NOT a legally binding contract. It does NOT include promises of future employment or wages. It includes an employment at-will statement.
Non-exempt Benefits: Overtime Pay Non-exempt employees are compensated for the time they work, not the jobs they complete, so if they work more than 40 hours per week, they make extra money.
Nonexempt: An individual who is not exempt from the overtime provisions of the FLSA and is therefore entitled to overtime pay for all hours worked beyond 40 in a workweek (as well as any state overtime provisions). Nonexempt employees may be paid on a salary, hourly or other basis.
Exempt positions are excluded from minimum wage, overtime regulations, and other rights and protections afforded nonexempt workers. Employers must pay a salary rather than an hourly wage for a position for it to be exempt.
What does non-exempt mean? If employees are non-exempt, it means they are entitled to minimum wage and overtime pay when they work more than 40 hours per week.