Calculating pay for exempt vs non-exempt employees

0:00- [Instructor] Are told that Naomi earns a weekly salary of $960 as an exempt employee. This week, Naomi worked 50 hours. Suppose Naomi instead works as a non-exempt employee at the same base rate, $24 per hour, and earns overtime at 1.5 times the regular rate for hours over 40.

0:22How much more would Naomi earn this week as non-exempt? Pause this video, have a go at that. All right, now let's think about it. So first of all, let's just remind ourselves what exempt versus non-exempt actually means. We're really talking about, for the most part, exempt versus non-exempt from things like overtime laws.

0:44If you are a non-exempt employee, that means things like overtime laws apply. And so, what would make someone exempt or non-exempt? Well, non-exempt, this tends to be shift work where someone is checking the number of hours that you're working, what you do for those hours is pretty prescribed, while exempt employees, these people, instead of earning hourly, they're getting a salary.

1:09They get paid the same amount, whether they work 35 hours one week and 60 hours the other week, they have more control over their time. You could imagine, well, for example, my job at Khan Academy. I lead Khan Academy, no one is counting my hours. I am an exempt employee.

1:26I just get a salary. And that's true for a lot of, not all, but for a lot of white collar jobs, desk jobs. If you're a professional at a company, many of them tend to be exempt. But if someone is making you fill out a time sheet, if what you're doing in that time is not really under your control, you're taking on a shift, you are likely to be a non-exempt employee and overtime laws apply.

1:51So, let's see. We already know how much she made that week as an exempt employee in her salary, but if she was non-exempt, we're talking about 50 hours. So what she would've done is, for the first 40 hours, she would have made $24 an hour, $24 an hour. Actually, let me put the units there.

2:11So for 40 hours, she would've made the $24 per hour. 24 per hour. And then she worked a total of 50 hours. So then, for the next 10 hours, she would get her overtime pay. So that'd be 10 hours times... What's 1.5 times $24? Let's see, half of 24 is 12, so you add that to that, that's $36 an hour.

2:37So her overtime pay is $36 per hour. So we could just get our calculator out. We could do this in our head. Well, I'll just get the calculator out for the sake of not making an error while I make a video. So, 40 times 24 is $960. And then essentially, the difference is just going to be what we see right over here.

3:02So I can already figure out how much more she would have made because... At least the way that this is set up and they just assumed it's a $24 per hour rate. So this part over here is $960. $960. This is very easy to do in our head. 10 hours times 36 hours is going to be $360.

3:26This is how much she would've made as a non-exempt employee. As an exempt employee, she made $960 of salary, which is that there, so the amount more that she would've made as a non-exempt employee is $360.