Often, yes. Paying an employee a salary does not make them exempt from overtime. Under the Fair Labor Standards Act (FLSA), a salaried employee qualifies for the executive, administrative, or professional exemptions only when the job passes three tests: the employee is paid on a salary basis, the salary is at least $684 per week, and the employee’s primary duty meets the duties test for one of those exemptions. If the job fails any one test, it does not qualify for those exemptions, and the employee is gene
Often, yes. Paying an employee a salary does not make them exempt from overtime. Under the Fair Labor Standards Act (FLSA), a salaried employee qualifies for the standard executive, administrative, or professional exemptions only when the job passes three tests: the employee is paid on a qualifying salary or fee basis, as applicable, pay meets the $684-per-week federal standard, calculated as a weekly equivalent where a fee basis is permitted, and the employee’s primary duty meets the duties test for one of those exemptions. If the position fails a requirement for a particular standard exemption, that exemption does not apply. Unless another exemption applies, the employee is generally entitled to overtime for hours worked over 40 in a workweek.
Key Takeaways
- A salary alone never makes an employee exempt from overtime.
- According to the U.S. Department of Labor, the federal salary level for the standard executive, administrative, and professional exemptions is $684 per week ($35,568 per year).
- Actual duties and applicable pay requirements determine exemption status, not job titles.
- The administrative exemption requires real discretion and independent judgment on matters of significance, not skill in following a manual.
- Some states and local jurisdictions have rules more protective than federal law, so check them before classifying any role.
What does it mean for an employee to be exempt from overtime?
An employee who qualifies for the exemptions discussed here is exempt from the FLSA’s minimum wage and overtime requirements. A non-exempt employee is covered and must be paid at least time and one-half their regular rate for every hour worked over 40 in a workweek. Employees who do not qualify for an applicable FLSA exemption are generally entitled to the FLSA’s minimum wage and overtime protections. Employers should be able to show that an employee meets all applicable requirements for the exemption.
What tests must a salaried employee pass to be exempt?
To qualify for the standard executive, administrative, or professional exemptions, often called the white-collar exemptions, an employee generally must pass all three of these tests:
- Method-of-payment test. The employee is paid on a qualifying salary or fee basis, as permitted for the specific exemption.
- Salary level test. Pay meets the applicable $684-per-week federal standard, assessed as a weekly equivalent for fee-basis pay.
- Duties test. The employee’s primary duty matches the duties of an exempt executive, administrative, or professional role.
If the job fails any one test, the employee does not qualify under the applicable standard executive, administrative, or professional test, even when the other two are met. Other FLSA exemptions and special rules apply to certain occupations and industries. According to the Department of Labor, the salary thresholds do not apply to certain roles, including doctors, lawyers, teachers, and outside sales employees.
What is the salary threshold for exempt employees in 2026?
According to the U.S. Department of Labor’s salary level table, the federal standard salary level for the executive, administrative, and professional exemptions is $684 per week, equal to $35,568 per year. Highly compensated employees must earn at least $107,432 in total annual compensation, including at least $684 per week paid on a salary or fee basis. State and local rules may set more protective requirements.
What happened to the 2024 overtime rule?
In 2024, the Department of Labor issued a rule that raised the salary level in two steps. The first increase took effect in July 2024, but a federal court in Texas vacated the rule nationwide in November 2024 before the second step. On May 14, 2026, the Department announced a technical amendment that removed the vacated language and restored the 2019 regulations, including the $684 weekly salary level and the $107,432 highly compensated employee threshold.
Do state laws change the salary threshold?
They can. Some states and local jurisdictions impose salary thresholds or other requirements that are more protective than federal law. Employers should check the applicable state and local requirements in addition to the federal FLSA rules, and confirm the rules for each state where they have employees. Helpside supports businesses across multiple states with federal and state-specific compliance guidance.
What does the administrative exemption require?
According to the Department of Labor’s Fact Sheet #17C, an employee qualifies for the administrative exemption only when all three requirements are met:
| Requirement | What it means in practice |
|---|---|
| Salary | Paid on a salary or fee basis of at least $684 per week |
| Office or non-manual work | Primary duty is work directly related to the management or general business operations of the employer or its customers, such as human resources, accounting, purchasing, or compliance |
| Discretion and independent judgment | Primary duty includes comparing options and making decisions on matters of significance; higher-level review of a decision does not necessarily defeat the exemption |
What counts as discretion and independent judgment?
Discretion and independent judgment means weighing possible courses of action and choosing one after considering them. The Department of Labor says it must be more than skill in applying well-established techniques, procedures, or standards found in manuals. A decision still counts if a supervisor later reviews or reverses it. A job is not a matter of significance just because a mistake would cost the business money.
Case study: why a skilled parts manager was still owed overtime
A federal court case shows how the duties test works in practice. In Stultz v. J.B. Hunt Transport, Inc., No. 13-CV-13705, 2014 WL 2615407 (E.D. Mich. June 12, 2014), a parts manager for a transportation company sued for unpaid overtime for the period he held that role, from 2011 to 2013. The company argued he was exempt under the administrative exemption. The U.S. District Court for the Eastern District of Michigan ruled that he was not exempt.
What did the parts manager do?
His work mixed office tasks with hands-on work. He audited scrapped tires against standards in a company manual and inspected trailers at company terminals, checking tire pressure and tread depth. He shipped, received, and issued parts, which included loading and unloading trucks. He also compared inventory to a database, joined company conference calls, trained employees, and ordered supplies. For about two months he filled in as a regional tire manager, meeting with vendors and reporting problems to supervisors to resolve.
Why did the court rule he was not exempt?
The employer described the manager as skilled and his work as important. Skill and importance alone did not establish the exemption. His principal work largely involved applying established standards and procedures, such as auditing scrapped tires against a company manual and following set inventory processes, rather than choosing between options on matters of significance. Although the court found that two recommendations he made during a brief temporary assignment as a regional tire manager involved some independent judgment, that work was not a primary duty of his parts-manager position.
What can employers learn from this case?
Three lessons apply to almost any salaried role:
- Importance is not the test. A job can be critical to the business and still be non-exempt.
- Skill is not discretion. Applying a manual well, even with expertise, is not independent judgment.
- Primary duty controls. Occasional discretion, such as a recommendation made during a temporary assignment, does not make a role exempt if the employee’s primary duty does not involve the required independent judgment.
What happens if you misclassify a salaried employee?
Misclassification can be costly. An employee wrongly treated as exempt can recover unpaid overtime, usually for the past two years, or three years if the violation was willful. An employer may also owe an equal amount in liquidated damages, although a court can reduce or deny those damages if the employer establishes the statutory good-faith defense. In Stultz, the court found no willful violation, applied the two-year period, and awarded both unpaid overtime and an equal amount in liquidated damages. Attorney fees and state penalties can add more.
How can you check whether your salaried roles are exempt?
Use these steps to review each salaried position:
- List every salaried role and the employee’s actual weekly pay.
- Compare pay to the requirement. Check the federal pay requirement for the exemption being considered and any applicable state requirement.
- Confirm the method of payment. Confirm that the employee’s method of payment and any deductions meet that exemption’s rules.
- Write down the primary duty based on what the employee actually does, not the job title or job description.
- Match that duty to a specific exemption and its full duties test.
- Reclassify roles that do not qualify for any exemption as non-exempt, track their hours, pay overtime going forward, and assess whether any back wages are owed.
- Document your decision and review it when duties, pay, or the law changes.
How Helpside helps with exempt classification
Classifying salaried employees correctly takes a close look at duties, pay, and state law. Helpside’s HR Business Partners help small and midsize businesses review salaried positions, flag roles that may not meet an exemption, and plan next steps. As a PEO, Helpside can also help implement the appropriate payroll and overtime treatment for reclassified employees. If you have questions about whether your salaried employees should be paid overtime, schedule a consultation with an HR expert to review your exempt positions before a wage claim does it for you.
Frequently asked questions
Do salaried employees get paid overtime?
Some do. A salaried employee is generally entitled to overtime for hours over 40 in a workweek unless an applicable exemption is met. For the standard executive, administrative, and professional exemptions, that means being paid on a qualifying salary or fee basis, as applicable, earning at least $684 per week, and having a primary duty that meets the duties test. A salaried employee who fails any one of those tests does not qualify under that standard exemption and may be owed overtime unless another exemption applies.
What is the minimum salary to be exempt from overtime in 2026?
According to the U.S. Department of Labor, the federal minimum salary for the standard executive, administrative, and professional exemptions is $684 per week, or $35,568 per year. Highly compensated employees must earn at least $107,432 in total annual compensation, including at least $684 per week on a salary or fee basis. Some states and local jurisdictions impose more protective requirements, so employers should check those rules as well.
What happened to the 2024 DOL overtime rule?
The Department of Labor’s 2024 overtime rule raised salary levels in two steps. The July 2024 increase took effect temporarily, but a federal court in Texas vacated the 2024 rule nationwide in November 2024. On May 14, 2026, the Department announced a technical amendment that removed the vacated language and restored the 2019 rules, including the $684 weekly salary level and the $107,432 threshold for highly compensated employees.
Does a job title make an employee exempt?
No. According to the Department of Labor, job titles do not determine exemption status. What matters is the work the employee actually performs and how they are paid. A role called manager, coordinator, or specialist can still be non-exempt if the primary duty does not meet a duties test. Employers should compare each role’s real day-to-day duties, not its title or job description, to the exemption requirements.
What is the administrative exemption?
The administrative exemption covers certain employees paid on a qualifying salary or fee basis who do office or non-manual work tied to running the business. To qualify, the employee must earn at least $684 per week on a salary or fee basis. Their primary duty must relate directly to the management or general business operations of the employer or its customers. That primary duty must also include discretion and independent judgment on matters of significance.
What does discretion and independent judgment mean?
It means comparing possible courses of action and making a decision after weighing them, without immediate direction from a supervisor. The Department of Labor says it must be more than skill in applying set procedures or standards found in manuals. Factors include whether the employee can shape company policy, commit the business financially, or depart from established procedures without prior approval. Reviewed decisions can still count.
What happens if I misclassify an employee as exempt?
The employee can recover unpaid overtime, usually for the past two years, or three years if the violation was willful. An employer may also owe an equal amount in liquidated damages, although a court can reduce or deny them if the employer establishes the good-faith defense. Attorney fees and state penalties can increase the cost further. Reviewing salaried roles regularly and correcting any misclassification quickly helps limit back pay and reduce the risk of a wage claim.
Can a non-exempt employee be paid a salary?
Yes. An employer can pay a non-exempt employee a salary, but the salary does not remove the right to overtime. Employers must record hours worked and calculate overtime using the applicable regular-rate rules. The calculation depends on what hours the salary covers, other includable pay, and any lawful alternative pay arrangement; a salary alone does not satisfy the overtime obligation.
This article provides general information and is not legal advice. Consult an employment attorney or HR professional about your specific situation.
rally owed overtime at time and one-half for every hour over 40 in a workweek.
Key Takeaways
- A salary alone never makes an employee exempt from overtime.
- According to the U.S. Department of Labor, the federal salary level for the executive, administrative, and professional exemptions is $684 per week ($35,568 per year).
- Job duties decide exemption status. Job titles do not.
- The administrative exemption requires real discretion and independent judgment on matters of significance, not skill in following a manual.
- Some states and local jurisdictions have rules more protective than federal law, so check them before classifying any role.
What does it mean for an employee to be exempt from overtime?
An exempt employee is not covered by the FLSA’s minimum wage and overtime requirements. A non-exempt employee is covered and must be paid at least time and one-half their regular rate for every hour worked over 40 in a workweek. Employees who do not qualify for an applicable FLSA exemption are generally entitled to the FLSA’s minimum wage and overtime protections. Employers should be able to show that an employee meets all applicable requirements for the exemption.
What tests must a salaried employee pass to be exempt?
To qualify for the executive, administrative, or professional exemptions, often called the white-collar exemptions, an employee generally must pass all three of these tests:
- Salary basis test. The employee receives a predetermined, fixed salary that is not reduced because of changes in the quality or quantity of work performed.
- Salary level test. The salary is at least $684 per week, the federal standard salary level.
- Duties test. The employee’s primary duty matches the duties of an exempt executive, administrative, or professional role.
If the job fails any one test, the employee does not qualify for a white-collar exemption, even when the other two are met. Other FLSA exemptions and special rules apply to certain occupations and industries. According to the Department of Labor, the salary thresholds do not apply to certain roles, including doctors, lawyers, teachers, and outside sales employees.
What is the salary threshold for exempt employees in 2026?
According to the U.S. Department of Labor's salary level table, the federal standard salary level for the executive, administrative, and professional exemptions is $684 per week, equal to $35,568 per year. Highly compensated employees must earn at least $107,432 in total annual compensation, including at least $684 per week paid on a salary or fee basis. State and local rules may set more protective requirements.
What happened to the 2024 overtime rule?
In 2024, the Department of Labor issued a rule that would have raised the salary level in two steps. A federal court in Texas vacated that rule nationwide in November 2024. On May 14, 2026, the Department announced a technical amendment that removed the vacated language and restored the 2019 regulations, including the $684 weekly salary level and the $107,432 highly compensated employee threshold.
Do state laws change the salary threshold?
They can. Some states and local jurisdictions impose salary thresholds or other requirements that are more protective than federal law. Employers should check the applicable state and local requirements in addition to the federal FLSA rules, and confirm the rules for each state where they have employees. Helpside supports businesses across multiple states with federal and state-specific compliance guidance.
What does the administrative exemption require?
According to the Department of Labor’s Fact Sheet #17C, an employee qualifies for the administrative exemption only when all three requirements are met:
| Requirement | What it means in practice |
|---|---|
| Salary | Paid on a salary or fee basis of at least $684 per week |
| Office or non-manual work | Primary duty is work directly related to the management or general business operations of the employer or its customers, such as human resources, accounting, purchasing, or compliance |
| Discretion and independent judgment | Primary duty includes comparing options and making decisions on matters of significance, free from immediate direction or supervision |
What counts as discretion and independent judgment?
Discretion and independent judgment means weighing possible courses of action and choosing one after considering them. The Department of Labor says it must be more than skill in applying well-established techniques, procedures, or standards found in manuals. A decision still counts if a supervisor later reviews or reverses it. A job is not a matter of significance just because a mistake would cost the business money.
Case study: why a skilled parts manager was still owed overtime
A federal court case shows how the duties test works in practice. In Stultz v. J.B. Hunt Transport, Inc., a parts manager for a transportation company sued for unpaid overtime for the period he held that role, from 2011 to 2013. The company argued he was exempt under the administrative exemption. On June 12, 2014, the U.S. District Court for the Eastern District of Michigan ruled that he was not exempt.
What did the parts manager do?
His work mixed office tasks with hands-on work. He audited scrapped tires against standards in a company manual and inspected trailers at company terminals, checking tire pressure and tread depth. He shipped, received, and issued parts, which included loading and unloading trucks. He also compared inventory to a database, joined company conference calls, trained employees, and ordered supplies. For about two months he filled in as a regional tire manager, meeting with vendors and reporting problems to supervisors to resolve.
Why did the court rule he was not exempt?
The employer described the manager as skilled and his work as important. The court found that did not matter. His primary duties involved following standard operating procedures, not choosing between options or making final decisions. He could not deviate from auditing standards, choose which parts to order, set inventory levels, or select vendors. The limited judgment he used during year-end inventory audits was too small to count as part of his primary duty.
What can employers learn from this case?
Three lessons apply to almost any salaried role:
- Importance is not the test. A job can be critical to the business and still be non-exempt.
- Skill is not discretion. Applying a manual well, even with expertise, is not independent judgment.
- Primary duty controls. An occasional decision, such as a one-time vendor recommendation, does not make a role exempt if most of the job follows set procedures.
What happens if you misclassify a salaried employee?
Misclassification can be costly. An employee wrongly treated as exempt can recover unpaid overtime, usually for the past two years, or three years if the violation was willful. Courts can also award liquidated damages equal to the unpaid overtime, which doubles the amount owed. In the Stultz case, the court awarded the parts manager both his unpaid overtime and an equal amount in liquidated damages. Attorney fees and state penalties can add more.
How can you check whether your salaried roles are exempt?
Use these steps to review each salaried position:
- List every salaried role and the employee’s actual weekly pay.
- Compare pay to the salary level. Use $684 per week federally, and check any state or local requirements that apply.
- Confirm the salary basis. Make sure pay is not docked for partial days or for the quality or quantity of work.
- Write down the primary duty based on what the employee actually does, not the job title or job description.
- Match that duty to a specific exemption and its full duties test.
- Reclassify roles that do not qualify for any exemption as non-exempt, track their hours, and pay overtime going forward.
- Document your decision and review it when duties, pay, or the law changes.
How Helpside helps with exempt classification
Classifying salaried employees correctly takes a close look at duties, pay, and state law. Helpside’s HR Business Partners help small and midsize businesses review salaried positions, flag roles that may not meet an exemption, and plan next steps. As a PEO, Helpside also handles payroll and overtime calculations so reclassified employees are paid correctly. If you have questions about whether your salaried employees should be paid overtime, schedule a consultation with an HR expert to review your exempt positions before a wage claim does it for you.
Frequently asked questions
Do salaried employees get paid overtime?
Some do. A salaried employee is owed overtime unless the job meets every requirement of an FLSA exemption. For the executive, administrative, and professional exemptions, that means being paid on a salary basis, earning at least $684 per week, and having a primary duty that meets the duties test. A salaried employee who fails any one of those tests does not qualify and is generally owed time and one-half for hours over 40.
What is the minimum salary to be exempt from overtime in 2026?
According to the U.S. Department of Labor, the federal minimum salary for the executive, administrative, and professional exemptions is $684 per week, or $35,568 per year. Highly compensated employees must earn at least $107,432 in total annual compensation, including at least $684 per week on a salary or fee basis. Some states and local jurisdictions impose more protective requirements, so employers should check those rules as well.
What happened to the 2024 DOL overtime rule?
A federal court in Texas vacated the Department of Labor’s 2024 overtime rule nationwide in November 2024, so its higher salary levels never took lasting effect. On May 14, 2026, the Department announced a technical amendment that removed the vacated language from its regulations. The amendment restored the 2019 rules, including the $684 weekly salary level and the $107,432 threshold for highly compensated employees.
Does a job title make an employee exempt?
No. According to the Department of Labor, job titles do not determine exemption status. What matters is the work the employee actually performs and how they are paid. A role called manager, coordinator, or specialist can still be non-exempt if the primary duty does not meet a duties test. Employers should compare each role’s real day-to-day duties, not its title or job description, to the exemption requirements.
What is the administrative exemption?
The administrative exemption covers certain salaried employees who do office or non-manual work tied to running the business. To qualify, the employee must earn at least $684 per week on a salary or fee basis. Their primary duty must relate directly to the management or general business operations of the employer or its customers. That primary duty must also include discretion and independent judgment on matters of significance.
What does discretion and independent judgment mean?
It means comparing possible courses of action and making a decision after weighing them, without immediate direction from a supervisor. The Department of Labor says it must be more than skill in applying set procedures or standards found in manuals. Factors include whether the employee can shape company policy, commit the business financially, or depart from established procedures without prior approval. Reviewed decisions can still count.
What happens if I misclassify an employee as exempt?
The employee can recover unpaid overtime, usually for the past two years, or three years if the violation was willful. Courts can also award liquidated damages equal to the unpaid overtime, which doubles what the employer owes. Attorney fees and state penalties can increase the cost further. Reviewing salaried roles regularly and correcting any misclassification quickly helps businesses limit back pay and reduce the risk of a wage claim.
Can a non-exempt employee be paid a salary?
Yes. An employer can pay a non-exempt employee a salary, but the salary does not remove the right to overtime. The employer must still track the employee’s hours worked and pay time and one-half the regular rate for every hour over 40 in a workweek. For salaried non-exempt employees, the regular rate is generally the weekly salary divided by the number of hours the salary is meant to cover.
This article provides general information and is not legal advice. Consult an employment attorney or HR professional about your specific situation.
