Contemporary Literary genre is a misnomer because it really is the absence of a genre. But there are several ways you can tell if a work of fiction fits in this category. Some say that literary fiction is driven more by character while genre fiction is driven by plot. That’s not really true because some very good genre fiction relies more on character than plot. Another falsehood is that literary fiction has a higher quality of writing. But many genre fiction authors are very good writers. If you think about the classic authors of the past, most of them wrote genre fiction.
The first way to distinguish contemporary/literary fiction is that it will have universal truths and emotions we all experience. It gives expression to our emotions.
Most contemporary/literary fiction is also realistic meaning it has the following characteristics:
It contains characters that behave the way most readers would. The characters must be believable.
The story is set in the present.
The setting is a real place or at least seems like a real place.
The events are events that could happen in real life.
Dialogue is informal and conversational and often includes regional dialects.
There aren’t any sub-genre of Contemporary/Literary fiction because it is the absence of genre that makes this category. The minute you add mystery or aliens, it ceases to fit here. Some examples of Contemporary/Literary fiction are “Slaughterhouse Five” by Kurt Vonngut, “Atonement: A Novel” by Ian McEwan, and “White Noise” by Don DiLillo. Many of the classic modern novels of the past by writers like Hemmingway, Faulkner, and Fitzgerald also fit in this category.