Job Classification: Exempt vs. Non-Exempt
Exempt vs. Non-Exempt: How Do You Know Which Test Applies?
Non-exempt employees are entitled to overtime pay under the FLSA for hours worked over 40 in a workweek. Exempt employees are not, but only if they meet both a minimum salary threshold and a duties test—typically executive, administrative, or professional roles.
Classification requires satisfying two separate tests. The salary basis test requires a fixed salary above a federal minimum threshold. The duties test examines actual job responsibilities against categories defined by the FLSA—executive, administrative, professional, and a few narrower categories.
A common and costly mistake is classifying someone as exempt based on job title alone. Misclassification exposes an employer to back overtime pay, often across multiple employees if it reflects a broader job category rather than one individual.
Exempt Employee Classification Key Facts and Misclassification Risks
- Requires meeting both a salary threshold test and a duties test—title alone doesn’t determine exemption.
- Duties test categories include executive, administrative, and professional roles, among others.
- Misclassification can trigger back overtime pay across multiple employees and years.
- One of the most common subjects of wage-and-hour class action litigation.
Frequently Asked Questions
Does paying someone a salary automatically make them exempt from overtime?
No—they must also meet a specific duties test.
Can a job title determine exempt status?
No—job title alone doesn’t determine exempt status; the employee must also satisfy the salary basis and duties tests.
What's the risk of misclassifying an employee as exempt?
Back overtime pay, potentially across multiple years and employees.
Can an employee’s exempt status change if their job duties change?
Yes—if actual day-to-day responsibilities shift away from exempt duties, the employer should reassess classification regardless of the job title.
Does the salary threshold for exempt status change over time?
Yes—the federal minimum salary threshold is periodically updated, so employers should review exempt salaries regularly to stay compliant.