Exempt vs Non-Exempt

Non-exempt employees are covered by FLSA overtime rules — they must be paid 1.5× for hours over 40 per week. Exempt employees, typically salaried managers meeting specific duties tests, are not. Getting this wrong is expensive.

No. The salary alone does not determine exempt status. The employee must also meet specific duties requirements under the FLSA. Misclassifying someone as exempt is one of the most common — and most audited — wage violations.

As of 2025, the federal threshold is $684 per week ($35,568 annually). Employees paid below this amount generally cannot be classified as exempt regardless of their job duties.

The executive exemption generally requires managing two or more full-time employees, having genuine authority over hiring or firing decisions, and earning above the salary threshold. Job title alone is not sufficient — the actual duties matter.