The three-part test
What does it take to be exempt from overtime under the FLSA?
To qualify for one of the white-collar (EAP) exemptions, an employee must satisfy all three requirements simultaneously:
- Salary basis test: The employee must be paid a predetermined, fixed salary that is not subject to reduction based on the quality or quantity of work. Docking pay for partial-day absences (other than FMLA leave) or for performance quality can destroy the exemption.
- Salary level test: The salary must meet or exceed the minimum threshold — currently $684 per week ($35,568 annualized) at the federal level.
- Duties test: The employee's primary duty must fall within one of the recognized exemption categories: executive, administrative, or professional.
Failing any one of these three means the employee is non-exempt and entitled to overtime at 1.5× their regular rate for hours over 40 in a workweek.
What happened with the 2024 DOL salary rule?
In April 2024, the Department of Labor published a final rule that would have raised the EAP salary threshold to $844/week (effective July 1, 2024) and then to $1,128/week (effective January 1, 2025). However, in November 2024, the U.S. District Court for the Eastern District of Texas vacated the entire rule. The DOL appealed to the Fifth Circuit, which denied the appeal. On May 14, 2026, the DOL formally published a technical amendment restoring the 2019 salary levels of $684/week (EAP) and $107,432 total annual compensation (HCE).
How does the executive exemption duty test work?
The executive exemption is for managers and supervisors. To qualify, the employee's primary duty must be managing the enterprise, or a customarily recognized department or subdivision of it. All of these must be met:
- The primary duty is management of the enterprise or a recognized department/subdivision.
- The employee customarily and regularly directs the work of at least two full-time employees (or the equivalent — for example, four half-time employees).
- The employee has authority to hire or fire, or their recommendations on hiring, firing, advancement, or other status changes are given particular weight.
"Primary duty" means the principal, main, or most important duty — not necessarily the majority of time. A store manager who also works the register can still qualify if management is the primary purpose of the role.
How does the administrative exemption duty test work?
The administrative exemption is the most commonly litigated because it requires the subjective element of "discretion and independent judgment." To qualify:
- The primary duty is office or non-manual work directly related to the management or general business operations of the employer or the employer's customers.
- The primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
"Management or general business operations" means work in functional areas like finance, human resources, marketing, quality control, legal, compliance, or IT administration — as opposed to producing the goods or services the employer sells. An HR manager who designs the benefits program exercises discretion on significant matters. An HR assistant who processes routine paperwork does not.
How does the professional exemption duty test work?
The professional exemption has two branches:
Learned professional
- The primary duty is work requiring knowledge of an advanced type in a field of science or learning.
- The knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction (typically a four-year degree or more in a specialized field).
Common qualifying roles: physicians, lawyers, engineers, architects, accountants (CPAs), registered nurses, pharmacists, and teachers. A medical technician who followed a standardized testing protocol would likely not qualify.
Creative professional
- The primary duty is work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.
Examples include journalists whose work requires analysis and interpretation (not just rewriting press releases), graphic artists with creative latitude, and musicians or composers.
Beyond the federal floor
Do any states set a higher overtime exempt salary threshold?
Yes. Several states have enacted salary thresholds that exceed the federal $684/week. When both federal and state law apply (which is most situations), the employer must meet whichever threshold is higher. State thresholds change frequently, so verify the current level with your state labor department. Here are notable examples as of 2026:
| State | Threshold mechanism | Where to verify |
|---|---|---|
| California | Tied to minimum wage — exempt salary must be at least 2× the state minimum wage for a 40-hour week | CA DLSE |
| New York | Varies by region (NYC, Long Island/Westchester, rest of state); adjusted annually | NY DOL |
| Washington | Tied to state minimum wage with a multiplier; adjusts annually | WA L&I |
| Colorado | Set by the Colorado Overtime and Minimum Pay Standards (COMPS) order; adjusts annually | CO CDLE |
| Maine | Threshold based on the federal poverty level multiplier | ME DOL |
Even if you earn above the federal threshold, you could be non-exempt under your state's higher threshold. For state-specific take-home breakdowns, see our take-home pay by state calculator.
What about highly compensated employees (HCE)?
The FLSA provides a streamlined exemption for highly compensated employees who earn total annual compensation of at least $107,432 (including at least $684/week paid on a salary basis). These employees only need to "customarily and regularly" perform any one of the exempt duties described above — they do not need to meet the full primary-duty requirement.
"Total annual compensation" includes salary, commissions, nondiscretionary bonuses, and other nondiscretionary compensation, but does not include board, lodging, payments for medical or life insurance, or contributions to retirement plans.
What happens if an employee is misclassified as exempt?
If an employer treats a non-exempt employee as exempt and does not pay overtime, the financial exposure can be substantial:
- Back overtime pay: The employer owes unpaid overtime (1.5× the regular rate for hours over 40/week) for the entire misclassification period. The statute of limitations is two years for non-willful violations and three years for willful violations.
- Liquidated damages: The FLSA allows courts to award liquidated damages equal to the unpaid overtime amount, effectively doubling the employer's liability, unless the employer can prove the violation was in good faith and based on reasonable grounds.
- DOL enforcement: The Wage and Hour Division can investigate, order back pay, and assess civil money penalties. Repeated or willful violators face penalties of up to $2,451 per violation (adjusted annually for inflation).
- Private lawsuits and collective actions: Employees can sue individually or as a group. Collective actions under the FLSA (similar to class actions) can involve hundreds or thousands of current and former employees.
Common misclassification traps
These are the most frequent mistakes employers make when classifying workers as exempt:
- Job title alone. Calling someone a "manager" or "director" does not make them exempt. The DOL and courts look at what the employee actually does, not the title on the business card. A "project manager" who follows instructions rather than exercising independent judgment likely fails the administrative duties test.
- Salary without duties analysis. Paying someone above $684/week does not automatically make them exempt. The duties test must be satisfied independently.
- Improper salary deductions. Docking an exempt employee's pay for partial-day absences (outside of FMLA), for poor work quality, or because business is slow can destroy the salary basis. If the salary basis is lost, the employee is non-exempt and owed overtime retroactively.
- Ignoring state thresholds. An employee who qualifies as exempt under federal law may still be non-exempt under a state with a higher salary threshold. The employer must meet both.
- The "administrative" gray zone. Many support roles (executive assistants, bookkeepers, paralegals) are incorrectly classified as exempt-administrative. The key question is whether the employee exercises discretion and independent judgment on significant matters — following standard procedures does not qualify.
How to check if you are correctly classified
Use this framework:
- Check your pay structure: Are you paid a fixed salary of at least $684/week that does not change based on hours worked or work quality? If not, you are likely non-exempt.
- Identify your primary duty: Is your main job function managing people, running a business function with discretion, or applying advanced professional knowledge? If your work is primarily production, manual, or routine, you are likely non-exempt.
- Check your state: Does your state have a higher salary threshold? If your salary is between the federal and state thresholds, you may be non-exempt under state law even if you would be exempt federally.
- Review for salary-basis violations: Has your employer ever docked your pay for partial-day absences or for the quality of your work? If so, the salary basis may have been compromised.
If you believe you are misclassified, you can file a complaint with the DOL Wage and Hour Division or consult an employment attorney. Use our overtime pay calculator to estimate the overtime you may be owed.
Questions
Overtime exempt salary threshold FAQ
What is the federal overtime exempt salary threshold for 2026?
The federal FLSA salary threshold for the executive, administrative, and professional (EAP) exemptions is $684 per week, or $35,568 per year for a full-year employee. This is the 2019 level, restored by the DOL on May 14, 2026 after the courts vacated the 2024 rule that had attempted to raise it. The highly compensated employee (HCE) threshold is $107,432 in total annual compensation.
What is the difference between exempt and non-exempt employees?
An exempt employee is not entitled to overtime pay under the FLSA, regardless of hours worked. A non-exempt employee must receive at least 1.5 times their regular rate for every hour worked over 40 in a workweek. To be exempt, an employee must meet all three requirements: be paid on a salary basis, earn at least the minimum salary threshold, and perform duties that qualify under one of the recognized exemption categories (executive, administrative, professional, or highly compensated).
What are the three duty tests for FLSA overtime exemption?
The three main EAP duty tests are: (1) Executive, which requires managing the enterprise or a department, customarily directing at least two employees, and having authority over hiring and firing; (2) Administrative, which requires office or non-manual work related to management or general business operations with the exercise of discretion and independent judgment on significant matters; and (3) Professional, which requires work needing advanced knowledge in a field of science or learning, customarily acquired through prolonged specialized study (learned professional), or work requiring invention, imagination, originality, or talent (creative professional).
Does my state have a higher overtime salary threshold than the federal level?
Several states set salary thresholds above the federal $684/week. For example, California, New York, Washington, and Colorado each have state-specific thresholds that exceed the federal level and may be adjusted annually. When both federal and state thresholds apply, employers must meet whichever is higher. Check your state labor department website for the current state threshold.
What happens if an employer incorrectly classifies a non-exempt employee as exempt?
The employer owes back overtime pay for all hours worked over 40 per week during the misclassification period, typically going back two years (three years if the violation was willful). The employer may also owe liquidated damages equal to the unpaid overtime amount, effectively doubling the liability. The Department of Labor can pursue enforcement, and employees can file private lawsuits individually or as a collective action.
Can an employer avoid overtime by paying a salary instead of hourly wages?
No. Simply paying a salary does not make an employee exempt from overtime. The employee must also meet the minimum salary threshold and pass the applicable duties test. A salaried employee whose duties do not qualify under the executive, administrative, or professional exemptions is still entitled to overtime pay for hours worked over 40 in a workweek, even though they receive a salary.
- Sources: 29 CFR Part 541 (FLSA white-collar exemptions) · DOL Fact Sheets 17A-17H · DOL Technical Amendment, May 14, 2026 · E.D. Tex., Nov. 2024 (rule vacatur).
- 🔄 Last updated August 4, 2026 · Tax year 2026
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