Understanding Exempt vs. Non-Exempt Jobs at MIT

This chart shows "exempt-level" duties under the FLSA. If an employee's duties do not fall into one of the categories described in this chart, the employee is non-exempt, regardless of how much they are paid.

To be exempt under the FLSA, employees must be paid at or above a stated salary threshold. As of January 1, 2020, that threshold is $684/week ($35,568 annually). The salary threshold test does not apply to teachers, which at MIT includes faculty, instructors, lecturers, and coaches.

The salary threshold is not pro-rated for part-time work. While all full-time MIT salaried staff are paid above this salary threshold, some part-time professional staff are not. For example, a Research Scientist working at 50% effort and paid $30,000 per year does not meet the salary threshold test, and so must be categorized as "non-exempt" staff despite their professional-level duties. When applying the salary threshold to postdoctoral scholars, MIT considers both the fellowship stipend and associate pay as counting toward the threshold amount. For visitors, MIT considers both the pay from MIT and from the visitor's home institution.

There are two exceptions where the salaried non-exempt staff may be paid more than their normal salary:

1. If they work more than 40 hours in a week, they must be paid overtime for the hours worked in excess of 40.
   • These employees are not paid extra for any hours worked over their usual schedule but less than 40 in a week, as stated above.
   • There may be rare exceptions were there is a minimum wage issue—see below.
2. If any of these employees are effectively paid below $15.00/hour (the Massachusetts minimum wage rate) in any week when they work more than their typical hours, they must be paid that minimum wage for all hours worked:
   • A minimum wage issue is most likely to arise for very part-time employees (low-percentage effort) who work an exceptionally large number of hours in a particular week.

If an employee is owed overtime or minimum wage payments, those amounts are paid by the DLCI.

• MIT assumes a 40-hour work week. The employee's hours are determined by multiplying their percentage effort by 40 hours/week.
  • Example: an employee with a 20% appointment is considered to work 8 hours per week.
• Minimum wage is calculated based on the total hours actually worked up to 40 hours per week. If the effective hourly rate is less than $15.00, the DLCI must pay $15.00/hour for each additional hour worked beyond the regular schedule.
  • Example: an employee with a 10% appointment who is paid $500 week is normally paid an effective hourly rate of $125/hour. But if one week, she works 40 hours, her effective hourly rate is $12.50 ($500 ÷ 40), below minimum wage.
• Overtime is calculated based on an employee's "regular rate." Typically, an employee’s regular rate is determined by taking the employee's total weekly pay and dividing it by 40 hours.
  • However, if that calculation results in an hourly rate below the minimum wage rate, MIT uses a "blended hourly rate" method to calculate overtime. To determine the blended rate, an employee’s normal weekly pay is divided by the number of hours in the employee's normal weekly schedule to determine the regular rate. All other hours worked by the employee, up to hour 40, are assigned the minimum wage rate. MIT then calculates the average of the employee's regular pay + minimum wage pay. The employee is paid this blended rate X 1.5 for all hours worked over 40 in a week. See example #4 below.

1. Additional hours worked, but not over 40 hours in the week; no minimum wage issue

The employee works additional hours in the week but not more than 40

No additional pay due:

• No overtime was worked
• Minimum wage was paid for all hours worked ($679.33 ÷ 15 = $45.29; that exceeds the $15.00 minimum wage)

2. Additional hours worked; total hours exceed 40 hours in the week; no minimum wage issue

The employee works additional hours in the week including 5 overtime hours (hours in excess of 40)

Overtime payment due:

• Overtime calculation: “Regular hourly rate” is determined by dividing total pay by 40 hours: $679.33 ÷ 40 = $16.98
  • Overtime payment = 16.98 X 1.5 X 5 = $127.35
• Note that no additional payment is made for the hours worked in excess of 10 hours (the employee’s normal schedule) and 40 hours; overtime is due only for hours in excess of 40.
• No minimum wage payment due: Hourly rate (based on 40 hours) exceeds minimum wage.

3. Additional hours worked but fewer than 40 hours in the week; minimum wage issue

Employee works 10 additional hours above the normal scheduled hours

Minimum wage payment due:

• No overtime worked so no overtime pay is due
• Minimum wage payment due:
  • Total pay divided by number of hours actually worked: $104.50 ÷ 15 = $6.97, so below $15.00/hour
  • Minimum wage is due for the additional 10 hours @ $15.00/hour = $150.00

4. Additional hours worked in excess of 40 in the week; minimum wage issue

Employee works 39 additional hours, which includes 4 overtime hours

• Minimum wage payment due:
  • $104.50 ÷ 40 = $2.61/hour – below minimum wage
  • MIT will pay minimum wage of $15.00 for each hour over the weekly scheduled hours, up to 40 hours
  • $15.00 X 35 = $525.00
• Overtime calculation: Since the "regular hourly rate" (weekly salary ÷ total hours worked up to 40) is below minimum wage, MIT uses a "blended rate" methodology.

  This is calculated by taking the regular pay + the minimum wage pay divided by the number of hours worked up to 40.

  • Regular pay of $104.50
  • Minimum wage payment of $525.00 (see above)
  • Blended rate = ($104.50 + $525.00) ÷ 40 = $15.74
  • Overtime is $15.74 X 1.5 X 4 = $94.44
  • Total extra pay = $525.00 + $94.44 = $619.44

  We anticipate that this will happen rarely, if ever.

1. Initial calculation of employees' normal schedule.
   1. SAP will calculate their normal schedule based on their percentage effort and using a 40-hour work week. For example, someone with a 10% effort is deemed have a normal schedule of 4 hours per week. It does not matter what day of the week the hours are actually worked, or if the days worked vary from week to week.
2. Reporting of Extra Hours Worked. If a salaried non-exempt staff member works more hours than their normal schedule in any given week, they must report all the actual hours worked in the work week (Monday to Sunday):
   1. They must report their total hours worked – regularly scheduled hours plus all the extra hours worked.
   2. The reporting is done on a form in Atlas called "Salaried Non-Exempt Time Reporting."
   3. After the employee fills out the form, they send it to their DLCI approver. If approved, the DLCI contact sends the form to payroll@mit.edu.
   4. Payroll will calculate any overtime due, or any minimum wage payments. If any payment is due, Payroll will contact the DLCI before processing the payment.
   5. Payroll will process the overtime or minimum wage payments as a supplemental payment, either with the employee’s next paycheck or as an off-cycle payment.

If an employee never works more than their scheduled hours, they never have to do any weekly reporting. Human Resources will periodically ask salaried non-exempt staff to confirm their normal schedule.