"Exempt" means exempt from the Fair Labor Standards Act's minimum wage and overtime rules. It is a status the employee has to qualify for, not a box the employer ticks. Getting it wrong is the classic small-business overtime mistake: a salaried office manager working 50-hour weeks who turns out to be owed overtime. This post sets out the federal tests the Department of Labor (DOL) applies in 2026 and where state law can be stricter.
What is the difference between exempt and non-exempt?
A non-exempt employee is covered by the FLSA's overtime rule: at least one and a half times the regular rate for every hour over 40 in a workweek. An exempt employee meets one of the FLSA's exemptions, so the employer doesn't owe them overtime however many hours they work.
| Non-exempt | Exempt (white-collar exemptions) | |
|---|---|---|
| Overtime after 40 hours a week | Yes, at least 1.5 × regular rate | No |
| Federal minimum wage | Yes | No, but the salary must be at least $684 a week |
| How paid | Hourly, or salary plus overtime | Salary that doesn't drop with hours worked (with limited exceptions) |
| Qualified overtime on the 2026 W-2 (box 12 code TT) | Possible | None |
"Salaried" and "exempt" are not the same thing. A salaried employee who fails the duties test is non-exempt and is owed overtime on top of the salary. The DOL's overtime fact sheet says salaried employees who work over 40 hours are still owed overtime unless an exemption applies.
The three tests for exempt status
DOL Fact Sheet #17A says that to qualify for the executive, administrative or professional exemptions, an employee generally has to meet all three of these. Job titles do not decide it.
- Salary basis: paid a predetermined, fixed salary that isn't reduced because of the quality or quantity of work.
- Salary level: at least $684 a week, which is $35,568 a year.
- Duties: the job's primary duty is executive, administrative or professional work as the regulations define it.
| Exemption | Salary test | Primary duty, in short |
|---|---|---|
| Executive | $684 a week | Managing the business or a department, directing at least two full-time employees, with real say in hiring and firing |
| Administrative | $684 a week | Office work related to running the business, using discretion and independent judgment on significant matters |
| Learned professional | $684 a week | Work needing advanced knowledge in science or learning, usually from specialised study |
| Creative professional | $684 a week | Work needing invention, imagination or originality in a recognised artistic field |
| Computer employee | $684 a week, or at least $27.63 an hour | Systems analysis, programming or software design work |
| Outside sales | No salary test | Making sales away from the employer's place of business |
| Highly compensated employee | $107,432 a year total, including at least $684 a week in salary | Office or non-manual work with at least one exempt duty |
The DOL fact sheet is explicit that blue-collar workers who do manual work, and first responders such as police officers, firefighters and paramedics, are not exempt under these rules whatever they are paid.
Is the salary threshold $684 in 2026?
Yes, at federal level. The DOL's earnings thresholds page gives $684 a week ($35,568 a year) for the standard salary level and $107,432 for highly compensated employees. A 2024 DOL rule that would have raised those figures was vacated by a federal court, and in May 2026 the DOL published a technical amendment restoring the 2019 regulations, which set the $684 and $107,432 figures.
Several states set higher salary floors for exempt status, often tied to the state minimum wage, and some have their own duties tests. Where state and federal rules differ, the employer has to meet the one that is better for the employee. Check your state labor department before classifying anyone as exempt.
Common classification mistakes
- Treating everyone on salary as exempt. Salary is only one of three tests.
- Relying on a title like "manager" or "coordinator". The DOL looks at the actual primary duty.
- Paying a salary below $684 a week. That employee is non-exempt whatever the job.
- Docking an exempt employee's salary for a partial day or a slow week. DOL Fact Sheet #17G says an exempt employee must get the full salary for any week in which they do any work.
- Classifying an assistant or office administrator as exempt when the job is following procedures rather than exercising independent judgment on significant matters.
- Assuming household staff are exempt. A live-out nanny is non-exempt and gets overtime after 40 hours; only live-in domestic workers employed by a family are exempt from overtime.
How to classify an employee: a checklist
- Write down what the person actually spends most of their time doing.
- Match that against the exemption descriptions above. If none fits, the employee is non-exempt.
- Check the pay: a fixed salary of at least $684 a week for the federal test, or your state's higher figure.
- Check your state's rules, which may add a higher salary floor or a different duties test.
- If non-exempt, track hours by workweek and pay at least time and a half after 40. Show overtime hours and rate on their own pay stub line.
- Review the classification when the job or pay changes.
For the overtime arithmetic itself, including weeks with two pay rates or a bonus, see our post on how to calculate overtime pay.
Where PayDocs fits
The free hourly paycheck calculator works out a non-exempt employee's week: regular hours, overtime at time and a half, and the 2026 federal, Social Security, Medicare and supported state taxes. The pay stub generator then shows overtime on its own line beside regular hours; PayDocs works out federal income tax, Social Security, Medicare and supported state taxes for 2026 pay dates (see what we calculate).
PayDocs doesn't decide whether an employee is exempt. This is general information, not legal advice; for a borderline job, ask an employment lawyer or your state labor department.
Questions
What is the difference between exempt and non-exempt employees?
Non-exempt employees are covered by the FLSA's overtime rule and must get at least time and a half after 40 hours in a workweek. Exempt employees meet an exemption, usually by salary and duties, and aren't owed federal overtime.
Can salaried employees get overtime?
Yes. Being paid a salary doesn't make someone exempt. A salaried employee who earns under $684 a week or doesn't meet a duties test is non-exempt and is owed overtime for hours over 40 in a workweek.
What is the exempt salary threshold for 2026?
Under federal law, $684 a week ($35,568 a year), and $107,432 a year for highly compensated employees. The DOL restored these 2019 figures after a court vacated its 2024 rule. Some states set higher thresholds.
Does a job title make someone exempt?
No. The DOL says job titles do not determine exempt status. What counts is the salary and whether the employee's primary duty matches one of the exemptions.
Are hourly employees ever exempt?
Rarely. Most exemptions need a salary. The computer employee exemption can be met at $27.63 an hour or more, and outside sales employees have no salary test.
Sources
- U.S. Department of Labor: Fact Sheet #17A, Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees
- U.S. Department of Labor: Earnings thresholds for the EAP exemption
- U.S. Department of Labor: Technical amendment restoring the EAP exemption regulations (May 2026)
- U.S. Department of Labor: Fact Sheet #17G, Salary Basis Requirement and the Part 541 Exemptions
- U.S. Department of Labor: Fact Sheet #23, Overtime Pay Requirements of the FLSA
- U.S. Department of Labor: Fact Sheet #79B, Live-in Domestic Service Workers under the FLSA
Sources checked October 7, 2026. This article explains how pay documents work; it is not tax or legal advice.
