Exempt vs. Non-Exempt Employees: FLSA Overtime Rights & Salary Thresholds
Under federal employment law, whether you are entitled to overtime pay depends on your FLSA classification—not whether you are paid a salary or an hourly wage. This guide breaks down the legal tests governing exempt and non-exempt status.
The basic difference
The Fair Labor Standards Act (FLSA) guarantees minimum wage and overtime protections to American workers. Workers are categorized into two primary classifications:
- Non-exempt employees: Entitled to overtime pay at 1.5 times their regular rate of pay for all hours worked exceeding 40 in a single workweek.
- Exempt employees: Excluded from overtime pay requirements regardless of how many hours they work in a given week.
The three-prong legal exemption test
For an employer to legally classify an employee as exempt from overtime under the standard White-Collar exemptions (Executive, Administrative, Professional), the employee must satisfy the applicable salary and duties tests (with exceptions for some professions):
Prong 1: the salary basis test
The employee must be paid a predetermined, fixed salary that is not subject to reduction based on variations in the quality or quantity of work performed. If an employer docks your pay for working 36 hours instead of 40, the salary basis test may be violated, potentially voiding your exempt status.
Prong 2: the salary level test
The employee's salary must equal or exceed the Department of Labor threshold. The Department of Labor states that the 2024 rule was vacated. The generally applicable federal standard is $684 per week ($35,568 annually), and $107,432 annually for the highly compensated employee exemption. See the DOL rulemaking status. Some professions and exemptions use different tests; state thresholds may be higher.
A $45,000 salary exceeds the general federal salary level, but salary alone does not establish an exemption. The salary-basis and duties tests still matter, and state law may require more.
Prong 3: the job duties test
Earning a high salary is not enough; the employee's actual day-to-day job duties must meet the criteria in 29 C.F.R. Part 541:
- Executive exemption: Primary duty must be management of the enterprise or a recognized department, regularly directing the work of two or more full-time employees, with authority to hire or fire.
- Administrative exemption: Primary duty must be office or non-manual work directly related to the management or general business operations, requiring the exercise of discretion and independent judgment on significant matters.
- Professional exemption: Primary duty must require advanced knowledge in a specialized field of science or learning customarily acquired by prolonged intellectual instruction (e.g. attorneys, physicians, certified engineers, CPAs).
Salaried non-exempt: A common misconception
Many workers assume that being paid a salary automatically means no overtime. This is false. Millions of American workers are classified as "salaried non-exempt."
If you are salaried non-exempt, check which hours your salary covers. Overtime generally applies after 40 hours, but the regular-rate calculation depends on the pay arrangement. A qualifying fluctuating-workweek arrangement has different rules; the simple hourly calculator does not assess eligibility.
What to do if you are misclassified
Employer misclassification is one of the most common workplace wage violations. If you were improperly designated as exempt, you may be entitled to back pay for unpaid overtime over the past two years (three years for willful violations) plus liquidated damages under 29 U.S.C. § 216(b).
Calculate your potential overtime earnings using our Overtime Pay Calculator or Time and a Half Calculator.