The Fair Labor Standards Act (FLSA) requires employers to pay employees overtime (1 ¹ ₂ times their regular rate of pay) if they work over 40 hours ( 29 CFR 541 et seq. ). Employees can be paid on an hourly or a salary basis. If they are paid on an hourly basis, they are nonexempt--always. However, if they are paid on a salary basis, they can be either nonexempt or exempt. This is an important distinction that many employers often misunderstand. While the majority of salaried employees are categorized as "exempt" and therefore exempted from overtime, some employees are paid on a salary basis, classified as "nonexempt," and are not exempted from the overtime requirements of the FLSA.