Exempt vs nonexempt employees and other business terms, in plain English

An employee the overtime rule of the Fair Labor Standards Act (FLSA) applies to. The source page says that, unless exempt, employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek, at a rate not less than time and one-half their regular rate of pay.

Pay rules have more parts than this entry, and they can change. For a real situation, read the current rule on the source page.

In a sentence: Priya works the front desk at a clinic. Her course notes file that kind of role under nonexempt, so the overtime rule is the one that applies to it.

An employee an exemption from the overtime rule applies to. For the executive, administrative and professional exemptions, the fact sheet says the employee generally must meet certain job-duty requirements and be paid on a salary basis. A minimum salary level is part of it too; the amount has changed over time, so this page gives none.

Pay rules have more parts than this entry, and they can change. For a real situation, read the current rule on the source page.

In a sentence: In a business class, Marcus compares two job descriptions and writes which duties would point toward an exempt role and which would not.

Pay for hours worked over 40 in a workweek, at a rate not less than time and one-half the regular rate of pay, for covered employees who are not exempt.

Pay rules have more parts than this entry, and they can change. For a real situation, read the current rule on the source page.

In a sentence: Lena’s textbook uses the 40-hour workweek as its example of where overtime starts.

The fact sheet says exempt status is not determined by job title. The employee’s specific duties and salary must meet all of the requirements of the regulations.

In a sentence: Ben’s study group notes that a title such as manager does not settle the question by itself; the duties matter.

One of the exemptions. The primary duty must be managing the enterprise, or managing a recognized department or subdivision of it. The employee must regularly direct the work of at least two full-time employees or their equivalent, and have the authority to hire or fire, or have recommendations on hiring and firing given particular weight.

In a sentence: Nia reads a case about a shop supervisor and checks each part of the description against this entry.

One of the exemptions. The primary duty must be office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and it must include the use of discretion and independent judgment on significant matters.

In a sentence: Dev’s worksheet asks which phrase in this entry is about independent judgment.

One of the exemptions. A learned professional does work that is predominantly intellectual in character and requires advanced knowledge in a field of science or learning, customarily acquired by a prolonged course of specialized instruction. A creative professional does work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

In a sentence: Hana sorts the two kinds of professional exemption onto separate flashcards.

An organization that strives for a profit by providing goods and services desired by its customers.

In a sentence: Rosa’s class begins with this definition and asks her to name a business near her school.

The money a company receives by providing services or selling goods to customers.

In a sentence: Owen writes revenue beside sales on his flashcard, then lists what a bakery would count.

An expression of what a business’s founders want that business to accomplish, usually a sentence or two that states why the business exists.

In a sentence: Keisha drafts a one-sentence vision for a made-up tutoring company.

A broad description of how the firm will try to make its vision a reality. It focuses on the products a firm plans to offer or the target markets it plans to serve.

In a sentence: Paul’s made-up bakery says it will sell fresh bread to people in its own neighborhood. His instructor calls that a mission statement.

A measure of the performance of a particular process.

The source says metrics and KPIs are often used interchangeably, but separates them as in the KPI entry.

In a sentence: Carla tracks how many customers a made-up shop serves each day as a metric.

A measure directly tied to business objectives, with a target and a specific time frame for reaching that target. The source gives examples such as revenue per customer, customer retention rate and customer satisfaction score.

In a sentence: For a made-up online shop, Tomas sets a KPI of a chosen number of new customers by the end of the quarter.

The marketing mix, also known as the 4 Ps: product, price, place and promotion. The source describes it as the tactics a company can use to promote its products or services in the market in order to influence consumers to buy.

In a sentence: Gina makes a four-column chart for a made-up candle company, one column per P.

The good or service that the company provides.

In a sentence: Elias lists the made-up company’s candles as its product.

What the consumer pays in exchange for the product.

In a sentence: Wendy writes the amount a customer pays for one made-up candle under price.

Where the product is purchased.

In a sentence: Sam notes that the made-up candles are sold at a stall and on a website, and calls both place.

Advertising, sales and other communication efforts the company uses to attract the customer.

In a sentence: Alba lists a flyer and a social post as promotion for the made-up candle company.

The value of the output of all final goods and services produced within a country in a year.

In a sentence: Dana’s economics notes define GDP first, then ask what “final” leaves out.

Per person. The source’s example is GDP per capita, which it defines as GDP divided by the population.

In a sentence: Ruth’s textbook gives a made-up country’s GDP and population, and she writes the division that gives GDP per capita.

An economy experiences stagnant growth and high inflation at the same time.

In a sentence: Jon’s class reads a short case and picks out the two conditions that make it stagflation.

The general rule that as a firm employs more labor, eventually the amount of additional output produced declines. This is the idea people search for as the law of diminishing returns.

The glossary we read uses the name diminishing marginal productivity; it does not list the phrase law of diminishing returns.

In a sentence: Fatima’s notes say each added worker in a made-up workshop eventually adds less output than the one before.

The change in a firm’s output when it employs more labor; written mathematically as MP = ΔTP/ΔL.

In a sentence: Greg copies the formula for marginal product onto a card and adds what each symbol stands for.

The cost of the fixed inputs: spending a firm must make before production starts, and that does not change regardless of the production level.

In a sentence: Chloe’s made-up workshop must pay for its equipment before it makes anything, so she files it under fixed cost.

Cost of production that increases with the quantity produced; the cost of the variable inputs.

In a sentence: Shauna lists the materials a made-up workshop buys for each item as variable cost.