Employers must classify an employee’s job as either Exempt or Non-Exempt as required by The Fair Labor Standards Act (FLSA). The good news is, it is easier than ever to compensate any of your employees once you properly classify them.
Advanced Micro Solutions’ base W-2/1099 Forms Filer program operates independently or as part of a full-accounting suite of tools. Explore your platform by downloading our free 1099-etc Demo software today and entering your actual data.
What Makes Exempt vs. Non-Exempt Employees Different?
The main difference is the way that the employees are compensated and how their positions are structured. Exempt employment positions are excluded from:
- Minimum wage
- Overtime regulations
- Other rights and protective measures that are provided to non-exempt workers
Exempt employees receive a salary rather than an hourly wage. An example of an exempt position is a professional or an executive position.
Non-Exempt employees are not exempt from FLSA requirements. In that category, employees must be:
- Paid at least the federal minimum wage for every hour worked
- Given overtime pay not less than one-and-a-half times their hourly rate for hours worked beyond 40 during a week
People Also Ask
- Are there any exceptions or exemptions to filing W-2 forms? – In rare circumstances; but you should not file a Form W-2 for independent contractors. Do not send the forms to the SSA if you send one to an employee and receive a bounce-back.
- Are there any exceptions or exemptions to filing 1099 forms? – Yes; you should not file a 1099 form if you made payments to a corporation or accepted rent through a real estate agent. Do not submit a 1099 for any payments made to a tax-exempt organization.
Regardless of what “status” the employee falls under, there is not a difference in how they are taxed. All income is “earned income” and taxable based on the individual’s tax bracket. Using our software will help you to process payroll, as well as maintain compliance and organization.
This article was updated on April 25, 2026 to keep its information as fresh as possible. We update this article every six months, before and after tax season, to keep current with any changes.