Being paid a salary does not, by itself, take a worker out of overtime. The Fair Labor Standards Act's so-called white-collar exemptions require three things at once: payment on a salary basis, a weekly salary above a federally set minimum — $684 a week under the rule now in force, set in 2019 — and job duties that fit one of the defined categories, executive, administrative, or professional (U.S. Department of Labor, 2019 rule, effective January 1, 2020; 29 U.S.C. 213(a)(1)). Miss any one, and the overtime right under section 7 of the Act — time-and-one-half after 40 hours — still applies.
The categories come from the statute itself, enacted in 1938, and the Department of Labor fills in the details through regulations. The Wage and Hour Division enforces both the minimum wage, $7.25 an hour since July 24, 2009, and the overtime rule. Here is what each element of the test demands.
Which workers can these exemptions cover?
The exemptions reach workers in executive, administrative, professional, outside sales, and certain computer occupations whose pay and duties satisfy the tests. Section 13(a)(1) of the Act exempts them from both the minimum wage and the overtime requirement, and the law places the burden of proving an exemption on the employer.
The categories are narrower than their titles suggest. A "professional" in ordinary speech — a bookkeeper called a financial professional, a title with "manager" in it — is not automatically exempt. The test looks at what the worker actually does, decided case by case against the regulations at 29 C.F.R. part 541.
What is the salary basis test?
Salary basis means the worker receives a predetermined amount each pay period that is not reduced for variations in the quality or quantity of work. The Department of Labor's regulations (29 C.F.R. part 541) generally bar docking an exempt employee's salary for a partial-day absence; improper deductions can strip the exemption from an entire class of employees.
Certain deductions are permitted — full-day absences for personal reasons, penalties for safety violations in defined circumstances, unpaid leave taken under the Family and Medical Leave Act. The line is mechanical, and it matters: a worker who is truly salaried in name but docked by the hour is often nonexempt in fact.
How much must the salary be?
Under the rule currently in force, $684 a week — $35,568 a year — with at least $107,432 a year for the streamlined highly compensated employee test (U.S. Department of Labor final rule, 2019, effective January 1, 2020). Nonhourly compensation such as commissions and certain bonuses may cover up to 10 percent of the standard-test salary.
The figure has moved, and the movement is the story to watch. The Department issued a rule in 2024 raising the standard threshold to $844 a week on July 1, 2024, and $1,128 on January 1, 2025; a federal district court in Texas vacated that rule on November 15, 2024 (State of Texas v. DOL, E.D. Tex.), and the 2019 figure of $684 reverted. A threshold is a rule, and a rule can be rewritten or struck; only the number currently in force binds.
What duties must each category show?
Executive: the primary duty is managing the enterprise or a recognized department, the worker regularly directs the work of at least two full-time employees, and the worker has genuine authority over hiring and firing or meaningful weight in those decisions. Running the floor is management; working the register is not.
Administrative: the primary duty is office or nonmanual work directly related to management or general business operations, and it includes the exercise of discretion and independent judgment on significant matters. The Department's fact sheets give the classic contrast — an employee who decides which suppliers a company uses is exercising discretion; one who applies a fixed formula to purchase orders is not. Professional covers learned professions requiring advanced knowledge in a field of science or learning, typically acquired by prolonged instruction, and recognized artistic professions. Outside sales has no salary test at all: the primary duty must be making sales away from the employer's place of business.
All of the tests turn on the phrase primary duty, which the regulations define as the principal, main, major, or most important duty the worker performs — a question of fact judged by the time spent, the relative importance of the duties, the worker's relationship to managers and other employees, and pay relative to coworkers (29 C.F.R. part 541). Time spent matters, but it is not the only factor, and the regulations state that no fixed percentage of time decides the question. An exempt-classified worker who spends most of the week on the production line has a real claim that the exemption describes someone else.
Do computer employees have their own test?
Yes, and it can be satisfied by hourly pay. Workers in computer occupations are exempt if their primary duty consists of systems analysis, the design or development of computer systems and programs, or related machine-level work, and they are paid either on a salary basis or at an hourly rate of at least $27.63 an hour under the 2019 rule (U.S. Department of Labor final rule, 2019, effective January 1, 2020; 29 C.F.R. part 541).
The category is easy to over-read. Help-desk work, routine troubleshooting, and operating machinery the analyst built do not qualify; the exemption targets the analysis and design function. Job postings that attach "engineer" to any technology task have no bearing on the statutory analysis.
What happens when an exemption fails?
The worker becomes nonexempt, and the back-pay exposure is computed under the Act's ordinary rules — overtime due, generally with a two-year limitations period, three for willful violations (29 U.S.C. 255). The Wage and Hour Division recovered approximately $274 million in back wages for workers in fiscal year 2023 (U.S. Department of Labor, WHD, fiscal year 2023 enforcement data), and misclassification of exempt status is a recurring theme in that enforcement.
A failed exemption does more than cost the employer the unpaid premium. Liquidated damages can double the amount, and state law may add claims with longer reach. That arithmetic is why the duties test, not the job title, is where these disputes are actually won and lost.
This article is information, not professional advice. Classification questions turn on specific facts; consult the regulations or counsel for a particular workplace.
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