I had an employer ask me if i knew how to process payroll for hourly employees with exceptions. What does that mean?
Whatever he wants it to mean. The phrase by itself has no meaning. What exceptions? There are several hundred in FLSA, and more in state law.
Assuming he meant "hourly exempt" (one of many exceptions) you pay for hours worked with no OT premium. If he meant an hourly working for a church doing certain tasks, that is a different set of exceptions. FLSA is basically "exceptions-R-us".