Exempt vs. Non-Exempt Employees: What the FLSA Actually Requires
Under the Fair Labor Standards Act (FLSA), every employee is either “exempt” or “non-exempt” from federal overtime and, in most cases, minimum wage requirements. Non-exempt employees must be paid at least the federal minimum wage and overtime (1.5x their regular rate) for hours worked over 40 in a workweek. Exempt employees are not entitled to overtime pay, but only if they genuinely meet specific federal tests — being salaried or having a professional-sounding title is not enough on its own.
The Two-Part Test for Exemption
To be classified as exempt under one of the FLSA’s “white-collar” exemptions, an employee generally must meet both of the following:
- Salary basis test: The employee must be paid a fixed salary of at least $684 per week ($35,568 per year) as of 2026, and that salary generally can’t be reduced based on the quality or quantity of work performed.
- Duties test: The employee’s actual job duties, not their title, must primarily involve executive, administrative, professional, outside sales, or certain computer-related work as defined by DOL regulations.
Both parts must be satisfied. A salaried employee who doesn’t meet the duties test is still non-exempt and owed overtime, regardless of job title or pay structure.
Common Exemption Categories at a Glance
The most common FLSA white-collar exemptions include:
- Executive exemption — primary duty is managing the business or a department, and regularly directs the work of at least two other full-time employees
- Administrative exemption — primary duty involves office or non-manual work directly related to management or business operations, with discretion and independent judgment on significant matters
- Professional exemption — work requires advanced knowledge in a field of science or learning, or is in a recognized artistic or creative field
- Computer employee exemption — specific computer systems analysis, programming, or software engineering roles meeting DOL’s duties criteria
- Outside sales exemption — primary duty is making sales away from the employer’s place of business (no salary minimum applies to this exemption)
- Highly compensated employee exemption — total annual compensation above a higher DOL threshold, combined with performing at least one exempt duty
This is a high-level overview, not a substitute for a duties analysis. Each exemption has its own detailed regulatory test, and misapplying one is one of the most common findings in DOL Wage and Hour investigations.
Common Misclassification Mistakes
- Assuming a salaried employee is automatically exempt
- Classifying based on job title rather than actual day-to-day duties
- Applying an exemption to an employee who spends most of their time on non-exempt tasks
- Improperly docking an exempt employee’s salary in ways that jeopardize the exemption
- Using outdated salary thresholds after a regulatory change
Required Workplace Posters
Employers covered by the FLSA and related laws must display specific workplace posters. See our Required Workplace Posters page for the current, official DOL links organized by law and industry.
Not Sure How Your Employees Are Classified?
Misclassification is one of the most common — and costly — issues DOL investigators find. As a former U.S. Department of Labor Wage & Hour Investigator, I can review your job classifications against the actual duties being performed and flag risk before it becomes a violation.
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Frequently Asked Questions
Does paying someone a salary automatically make them exempt?
No. A salary is only one part of the test. The employee’s actual job duties must also meet one of the FLSA’s specific exemption categories.
What is the current minimum salary for exempt status?
As of 2026, the federal minimum is $684 per week ($35,568 per year), though several states set higher thresholds that override the federal minimum for employees in those states.
Can an exempt employee’s pay be docked?
Improper deductions from an exempt employee’s salary can jeopardize the exemption for that employee and others in the same job classification. There are limited, specific circumstances where deductions are allowed.
What happens if an employee is misclassified?
Misclassified employees may be owed back overtime pay, liquidated damages, and penalties, often going back two or three years depending on whether the violation was willful.
Do job titles determine exempt status?
No. DOL and courts look at the actual duties performed, not the job title. A “manager” who spends most of their time on non-exempt tasks may still be non-exempt.
Where can I find the workplace posters I’m required to display?
The U.S. Department of Labor maintains the official, current list of required posters at dol.gov/agencies/whd/posters. Poster requirements vary by which federal laws apply to your business.