Definition: An exempt employee is an employee who is excluded from the Fair Labor Standards Act’s minimum wage and overtime requirements because their job meets an exemption, most commonly the executive, administrative, professional, computer, or outside sales exemptions, which generally require both a minimum salary paid on a salary basis and qualifying duties.
EZTime labor rule alerts flag overtime and missed rest periods before payroll.
Most employees in the United States are nonexempt: they must receive at least the minimum wage and overtime for hours over 40 in a workweek. Exempt employees are the exception. If a job meets the requirements of an exemption, the employer does not have to pay overtime for long weeks. Because the consequences of getting it wrong can include back overtime, exempt status should be based on a careful review of each role.
DOL Fact Sheet #17A explains that, to qualify for the white-collar exemptions, employees generally must meet tests on salary level, salary basis, and duties. According to the fact sheet:
| Test | What it requires (per DOL Fact Sheet #17A) |
|---|---|
| Salary level | Paid not less than $684 per week. Nondiscretionary bonuses and incentive payments paid annually or more often can satisfy up to 10% of this level. |
| Salary basis | Paid on a salary basis, as defined in the regulations, rather than by the hour. |
| Duties | Primary duties match one of the exemptions, such as executive, administrative, professional, computer, or outside sales. |
Overtime rules have been the subject of rulemaking and litigation, so confirm the salary level currently in effect on the DOL website before relying on any figure, and check state law, which may set a higher threshold.
Fact Sheet #17A is explicit that job titles do not determine exempt status; the employee’s actual duties and salary must meet all the requirements. It also states that the exemptions do not cover manual laborers or other blue-collar workers, such as carpenters, electricians, mechanics, and laborers, who remain entitled to minimum wage and overtime no matter how highly paid. Being paid a salary does not by itself make someone exempt either; a salaried employee who fails the duties test is still owed overtime.
Hypothetical: A retailer pays a “shift supervisor” a salary of $750 per week. She spends most of her shift running the register and stocking shelves, has no authority over hiring or firing, and her recommendations about staff are not given particular weight. Although her salary exceeds $684 per week, her primary duty is not management, so she likely fails the executive duties test and should be treated as nonexempt.
If she works 48 hours in a week, her regular rate is $750 ÷ 48 = $15.625 per hour, assuming the salary is intended to cover all hours worked. The half-time overtime premium for 8 overtime hours is 8 × $15.625 × 0.5 = $62.50. DOL Fact Sheet #23 uses the same method in its example of a weekly salary divided by total hours. Arrangements where a salary covers a fixed number of hours are calculated differently, so check the regulations or the FLSA overtime rules guide.
| Exempt | Nonexempt | |
|---|---|---|
| Overtime under FLSA | Not required | Required over 40 hours in a workweek |
| Typical pay method | Salary at or above the threshold | Hourly, or salary plus overtime |
| Hours records | Employer choice; state law may require | Required under FLSA recordkeeping rules |
| Classification basis | Salary level, salary basis, and duties | Default status for most employees |
Exempt employees are not paid by the hour, but that does not mean their time is irrelevant. Many employers track exempt staff’s attendance and time off to administer PTO, plan coverage, and spot workload problems. Tracking hours does not by itself turn an exempt employee into a nonexempt one. What can create risk is treating exempt employees like hourly workers in pay, such as docking their salary for partial-day absences in ways the regulations do not allow, which can undermine the salary basis test.
Clear classification is easier when you have real data about hours and duties. EZTime records time for nonexempt employees with the GPS mobile time clock with geofencing, NFC tags, tablet kiosk, or biometric clocks, and can also track time for salaried staff when you want visibility into workloads. Overtime and break alerts flag nonexempt employees approaching 40 hours, timecard corrections keep an audit trail, and payroll-ready Excel/PDF exports work with any payroll software. See the attendance clock and pricing: from $2/employee/month with a 14-day trial. Related: nonexempt employee.
This is general information, not legal advice.
DOL Fact Sheet #17A states a salary level of not less than $684 per week. Confirm the level currently in effect on the DOL website and check whether your state sets a higher threshold.
No. The employee must also meet the salary basis and duties tests. DOL says job titles do not determine exempt status.
DOL Fact Sheet #17A states the exemptions do not apply to manual laborers or other blue-collar workers, such as carpenters, electricians, mechanics, and laborers.
FLSA hours recordkeeping requirements focus on nonexempt workers. Some employers track exempt time for workload or project purposes, and some state laws may have additional requirements.