Salaried Employees and Overtime: Who Is Actually Exempt
A salary does not make you exempt from overtime. Exemption takes three tests at once: you must be paid on a salary basis, earn at least $684 per week ($35,568 per year), and actually perform exempt duties. Fail any one of the three and you are nonexempt, which means you earn overtime on hours over 40 just like an hourly worker. Run your own numbers in our overtime pay calculator using the weekly salary option.
"You are salaried, so you do not get overtime" is one of the most repeated and most wrong sentences in American workplaces. The Fair Labor Standards Act does not exempt people for being salaried. It exempts certain jobs that meet all three parts of a test: the salary basis test, the salary level test, and the duties test. Millions of salaried workers fail at least one part and are legally entitled to overtime they have never been paid. This guide walks through each test, the current threshold numbers, and exactly how a salaried nonexempt worker's overtime is computed.
Test 1: the salary basis
The salary basis test asks how you are paid, not how much. You must receive a predetermined, fixed salary that does not change with the quality or quantity of your work. If your pay gets docked when you work a short day, or jumps when you work a long one, you are not on a salary basis. There are limited exceptions, like deductions for full-day personal absences or penalties for major safety violations, but the general rule is simple: a true salary is guaranteed regardless of hours.
Test 2: the salary level (and what happened to the 2024 rule)
The salary level test sets a floor: $684 per week, which is $35,568 per year. Earn less than that and you cannot be exempt under the standard executive, administrative, or professional exemptions, no matter what your duties are. There is also a separate highly compensated employee test at $107,432 per year, with a relaxed duties test for workers above that line.
Those numbers deserve an explanation, because they were in flux for two years. In April 2024, the Department of Labor issued a final rule that would have raised the threshold to $844 per week in July 2024 and $1,128 per week in January 2025, with automatic increases every three years. On November 15, 2024, a federal district court in Texas vacated the entire rule nationwide, finding the Department had exceeded its authority. The Department appealed, then withdrew the appeal. On May 14, 2026, the Department published a technical amendment formally rescinding the 2024 rule and reinstating the 2019 levels. That is now settled: the federal floor is $684 per week, $35,568 per year, and $107,432 for highly compensated employees.
Two caveats. First, several states set higher thresholds than the federal floor, including California, New York, Colorado, and Washington. In those states the state number controls. Second, the threshold is only one of three tests. Clearing $35,568 does not make you exempt by itself.
Test 3: the duties test (the one that decides most cases)
The duties test looks at what you actually do all day. The main exemption categories are executive, administrative, professional, computer employee, and outside sales. Each has specific requirements. The executive exemption generally requires managing a department or subdivision, supervising at least two full-time employees, and having real authority over hiring or firing. The administrative exemption requires office work directly related to management or business operations plus the exercise of discretion and independent judgment on significant matters. The professional exemption requires advanced knowledge in a field of science or learning, usually acquired through specialized education.
Job titles do not decide this. A "manager" who spends the day running a cash register and stocking shelves is not performing executive duties. An "administrative assistant" who follows checklists with no independent judgment is not performing administrative exempt duties. The Department of Labor and the courts look at the actual work, and employers carry the burden of proving an exemption applies. When in doubt, the duties test is where misclassification lives.
How salaried nonexempt overtime is computed
If you are salaried and nonexempt, you still get overtime, and the math depends on what your salary is understood to cover. There are two common arrangements.
When the salary covers all hours worked, the regular rate is the weekly salary divided by the total hours you actually worked that week. Because the salary already paid you straight time for every hour, the overtime premium is only the extra half time: 0.5 times the regular rate times your overtime hours. Example: a $800 weekly salary and a 50-hour week gives a regular rate of $16 per hour. The overtime premium is 0.5 x $16 x 10 = $80. Gross for the week: $880.
When the salary covers only the first 40 hours, the regular rate is the weekly salary divided by 40, and overtime is the full time and a half. Example: the same $800 salary and 50-hour week gives a regular rate of $20 per hour and an overtime rate of $30. Ten overtime hours pay $300. Gross: $1,100. That is a $220 difference from the first arrangement, which is why it matters what the salary was understood to cover. Our calculator offers both options so you can see each result.
California adds a wrinkle for salaried workers: the wage orders compute a nonexempt full-time salaried employee's regular hourly rate as one-fortieth of the weekly salary, and California's daily overtime and double-time rules apply to salaried nonexempt workers the same as hourly ones.
Common misclassification patterns
Certain setups show up again and again in Department of Labor investigations. Assistant managers in retail and food service who are paid a salary barely above the threshold but spend nearly all their time on non-management tasks. Office workers labeled "administrative" who process paperwork without discretion. IT support staff classified under the computer exemption who do routine help-desk work rather than systems analysis or programming. In each case the employer relied on the title and the salary, and skipped the duties test.
If any of this sounds like your job, the practical move is to document your actual duties for a few weeks: what you do, what decisions you make, who you supervise. Then compare that record against the exemption categories, or take it to your state labor agency or an employment attorney. Back wages for unpaid overtime can go back two years, or three if the violation was willful. And if you just want the number, plug your salary and hours into the calculator and see what the week should have paid.
Rules current as of October 2026. Sources: U.S. Department of Labor Fact Sheet #17 series and overtime final rule rescission (dol.gov); 29 CFR Part 541.