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Exempt vs Non Exempt Employees: What’s the Difference?

5 min read | Jun 10, 2024
 Marta Gongos- Ad Culture By Marta Gongos

The main difference between exempt vs non exempt employees is their participation or involvement in Canadian employment laws. These regulations apply and protect non-exempt employees but don’t apply to exempt employees. 

Employers must know the rights and exemptions between these two types of employees before hiring new talent. Otherwise, incorrect compensation may lead to back pay for unpaid wages and other costly penalties.

In this article, we’ll clear the confusion and draw significant boundaries on the exempt vs non exempt debate. Keep reading to learn more about their definitions and differences in benefits.

What Is an Exempt Employee?

An exempt employee is a person in the workforce whose rights aren’t protected by the Canada Labour Code (CLC). They don’t receive overtime pay and are exempted from provincial minimum wage, working hours, and a termination process. The exempt status depends on an employee’s job duties and title and the nature and amount of compensation. 

Employers are responsible for identifying their exempt employees and ensuring they meet the requirements. Fair warning: there’s no legal protection for employers who don’t meet the CLC regulations. 

Read more: 7 Common Company Policies You Need in Writing

Types of Exempt Positions
  • Chief Executive Officer
  • Chief Executive
  • Chief Operating Officer
  • Customer Service Manager
  • Account Manager
  • Executive Assistant
  • Doctors
  • Teachers
  • Nurses
  • Architects
  • Chemists
  • Lawyers
  • Programmers
  • Software Engineers
  • Analysts
Outside Sales
  • Travelling Salespeople
  • Sales Associates
Highly Compensated Individuals Employees who earn higher than a predetermined salary for doing administrative or non-manual work.

What Is a Non Exempt Employee?

When an employee is protected by employment laws like the Employment Standards Act (ESA) and the CLC for federal employees, they’re non exempt, meaning they get federal minimum wage, overtime pay, and set working hours. 

Most, if not all, employees in the rank-and-file group are non exempt employees. Their daily routine includes fulfilling project tasks. They’re not responsible for making decisions and managerial responsibilities like planning, directing, and overseeing operations. 

Non exempt employees taking a lunch break

Image Source: Canva

Exempt vs Non Exempt Employees Benefits

Let’s further define the differences between exempt and nonexempt employees. Read on to see the varying compensations for these two categories and better understand non exempt meaning. 

Working Hours

An exempt employee can opt to work longer or shorter hours per week. For instance, some doctors can choose how long they’ll stay in a hospital and the days they’re on duty. 

A non exempt employee can work up to 40 hours a week with a maximum limit of working 48 hours. These are split into eight hours of work time for every workday, with breaks. These grounds may extend provided there’s a written or electronic agreement with the employer. Unlike their counterpart, non exempt employees can’t choose their period of stay at work. 

Read more: The 4 Day Work Week Pros and Cons

Wage and Overtime Pay

Non-exempt employees are entitled to an hourly wage and paid overtime. These workers are paid by the hour and receive 1.5 times the regular hour rate when they work over 44 hours. 

Exempt employees receive a fixed salary but don’t get overtime pay. However, these salaried employees are free to work longer hours without additional compensation. 

A nurse wearing a stethoscope listening to her patient’s heartbeat

Image Source: Canva

Holidays and Paid Leaves

A non exempt employee can enjoy paid time off, holidays, and leaves. In Ontario, one year of successful employment gives an employee the right to enjoy two weeks of paid vacation annually. Workers in this category are entitled to use bereavement, maternal, sick, and other types of leaves stated under the ESA, CLC, or company policies. Exempt employees usually don’t have rights to these benefits, but employers may offer them. 

Read more: 6 Tips for Managing Remote Employees

Termination Procedures

An exempt employee may not be protected under the CLC or ESA regulations for termination. For non-exempt employees, it’s the employer’s responsibility to adhere to the following Ontario employment laws on termination procedures:

  • Termination of Employment
  • Constructive Dismissal
  • Temporary Layoff
  • Written Notice of Termination (with or without termination pay)
  • Mass Termination
  • Temporary Work After the Termination Date in the Notice
  • Recall Rights
  • Wrongful Dismissal

Being a Fair Employer Attracts More Interested Applicants

Now that you understand the difference between exempt vs non exempt employees, it’s time to assess the current roster and ensure all workers are compensated fairly. Staying up to code with the CLC and ESA is great for improving employee morale, reducing turnover, and attracting more talent. 

Let Ad Culture, Toronto’s top recruitment agency, be your partner in hiring skillful individuals today. Our team can help you find your “unicorn” from our pool of eager and experienced applicants as soon as your company needs it. Contact us to learn more about our procedures!

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