Exempt vs Non-Exempt Employees

Under the US Fair Labor Standards Act (FLSA), every employee is either non-exempt — entitled to at least the minimum wage and overtime after 40 hours in a workweek — or exempt from those rules. Whether you get overtime depends entirely on which side of that line you fall, and it is not a matter of what your job is called.

The three-part test for exemption

To be exempt under the common "white collar" exemptions, an employee generally must meet all three of the following. Fail any one and you are non-exempt.

1. Salary basis. You are paid a predetermined amount each pay period that does not drop because of the quantity or quality of your work. Docking a salaried exempt worker for a few hours off usually breaks this test.
2. Salary level. That amount is at least the federal threshold. As of the current federal rule this is $684 per week ($35,568 per year). A 2024 rule raised it, but courts vacated that increase in late 2024, so the $684 figure applies federally unless and until it changes. Several states set a higher floor.
3. Duties. Your primary duties fit an exemption category — executive, administrative, professional, outside sales, or certain computer roles. The title on your contract is irrelevant; what matters is what you actually do day to day.

The duties tests in brief

• Executive: primary duty is managing; regularly directs the work of at least two full-time employees; has real say in hiring and firing.
• Administrative: primary duty is office or non-manual work directly related to management or business operations, and includes the exercise of independent judgement on significant matters.
• Professional: work requiring advanced knowledge in a field of science or learning usually acquired by prolonged specialised instruction (law, medicine, engineering, accounting), or creative/artistic work.
• Outside sales: primary duty is making sales, and you are customarily away from the employer's place of business. No salary threshold applies.
• Highly compensated: total annual pay at or above a high threshold and you customarily perform at least one exempt duty.

Jobs that are always non-exempt

Regardless of pay, "blue collar" workers and first responders are non-exempt: construction and maintenance workers, technicians, police, firefighters, paramedics, and similar roles. Paying them a salary does not make them exempt — they are still owed overtime.

Salaried does not mean exempt

This is the most common misunderstanding. A salaried non-exempt employee is paid a fixed salary and is still entitled to overtime. Their regular rate for overtime is the weekly salary divided by the hours it is intended to cover, and overtime hours are paid on top. See how to calculate overtime pay and salary vs hourly pay.

Misclassification

Treating a non-exempt worker as exempt — to avoid paying overtime — is a frequent FLSA violation. Warning signs:

• A "manager" or "coordinator" title but no real authority and mostly the same tasks as the team.
• Salary below $684 a week (or your state's higher figure) with no overtime paid.
• Being told salaried employees "never get overtime" as a blanket rule.
• Deductions from a salaried worker's pay for partial-day absences, which can itself destroy the exemption.

Back pay for unpaid overtime can generally be claimed for two years (three if the violation was wilful). Complaints go to the Department of Labor's Wage and Hour Division or the equivalent state agency.

State rules can be stricter

States may set a higher salary threshold, a stricter duties test, or daily overtime. California, for example, ties its exempt salary floor to twice the state minimum wage and requires overtime after 8 hours in a day. Where state and federal rules differ, the one more favourable to the employee applies.

Check your overtime

If you are (or should be) non-exempt, the Overtime Calculator works out what time-and-a-half on your hours comes to, and the Time Card Calculator applies the split across a full week of shifts.

Sources

• US Department of Labor — Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees
• US Department of Labor — Fact Sheet #17G: Salary Basis Requirement
• US Department of Labor — Fact Sheet #17I: Blue-Collar Workers and First Responders
• US Department of Labor — Overtime Pay (current salary threshold)

This is general information, not legal advice — see the Disclaimer.