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Employee Classification – Exempt vs. Non-exempt

The federal Fair Labor Standards Act requires that employees be paid at least the federal minimum wage, as well as overtime at the rate of one and one-half (1.5) times their regular rate of pay for each hour actually worked in excess of forty (40) in a work week, unless they fall into an exemption. 

Exempt employees are not entitled to be paid the minimum wage or overtime pay.  The determination as to whether an employee is exempt or non-exempt depends on the employee’s job duties.  The most common employee exemptions are the executive exemption, administrative exemption, professional exemption, outside sales exemption and the highly compensated employee exemption. 

The Maryland Wage and Hour Law tracks fairly closely the federal statute.  Proper classification of employees is critical because penalties for violating the Fair Labor Standards Act and/or the Maryland Wage and Hour Law are substantial.