What is a key characteristic of exempt employees?

A key characteristic of exempt employees is that they are paid on a salary basis. This means that these employees typically receive a fixed amount of compensation for their work, regardless of the number of hours they may work in a week. The salary basis is a crucial factor that often distinguishes exempt employees from non-exempt employees, who are usually entitled to overtime pay and are typically paid on an hourly basis. By being exempt, these employees perform work that is usually executive, administrative, or professional in nature, and as such, their compensation structure reflects the expectation that they may work more than standard hours without additional pay.

In contrast, the concept of overtime pay applies primarily to non-exempt employees, who are entitled to receive extra compensation for hours worked beyond the standard workweek. The stipulation that exempt employees can only work a certain number of hours per week is not accurate, as they may work more than 40 hours without overtime pay, aligning with the responsibilities expected in their roles. Additionally, the provision of benefits such as health insurance or retirement plans varies by employer and is not inherently tied to exempt or non-exempt status.