Exempt Employee
An employee not entitled to overtime pay under FLSA.
An exempt employee is not entitled to overtime pay under FLSA. To qualify, the employee must be paid on a salary basis at or above the minimum threshold ($43,888/year as of 2024), and their primary duties must meet the executive, administrative, professional, computer, or outside sales exemption tests. Simply paying a salary does not automatically make an employee exempt.
Example
A department manager earning $65,000/year on salary who supervises five employees and has hiring authority qualifies as exempt under the executive exemption—no overtime is owed.
Why It Matters for Your Business
Incorrectly classifying a non-exempt employee as exempt is one of the most expensive payroll mistakes, potentially resulting in years of back overtime plus penalties.
Practical Tips
- •Review the duties test for each exemption category, not just the salary threshold.
- •Re-evaluate classifications whenever an employee's duties change significantly.
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