A non-exempt employee must be paid at least the minimum wage and time and a half for every hour over 40 in a workweek. An exempt employee isn't owed either, but only if they're paid a salary of at least $684 a week (as of October 2026) and their actual job duties pass one of the Department of Labor's exemption tests.
Most US employees are non-exempt. The Fair Labor Standards Act starts from the position that everyone gets minimum wage and overtime, and the exemptions are the narrow cases that come out of that. The DOL's Fact Sheet #17A puts the key point in one line: job titles don't determine exempt status.
Exempt and non-exempt side by side
| Non-exempt | Exempt | |
|---|---|---|
| Minimum wage | Yes, for all hours worked | No |
| Overtime at time and a half after 40 hours | Yes | No |
| How they're paid | Hourly or salary | Salary (or fee) of at least $684 a week, with limited exceptions |
| What decides it | The default | Salary level, salary basis and the duties test all passing |
Paying someone a salary doesn't make them exempt. A salaried receptionist who works 45 hours is still owed five hours of overtime if their duties don't pass a test. It's one of the easiest mistakes to make when you hire your first salaried team.
The salary tests
Fact Sheet #17A sets out the salary rules that apply to the main white-collar exemptions:
- Executive, administrative and professional employees must generally be paid on a salary basis at not less than $684 per week (administrative and professional can also be paid on a fee basis).
- Computer employees can be paid either a salary or fee of at least $684 a week, or at least $27.63 an hour if they're paid hourly.
- Highly compensated employees doing office or non-manual work are exempt if they earn total annual compensation of $107,432 or more, including at least $684 a week on a salary or fee basis, and regularly perform at least one exempt duty.
- Employers can use nondiscretionary bonuses and commissions paid annually or more often to cover up to one tenth of the standard salary level.
The DOL also notes that the exemptions don't apply to manual labourers or other blue-collar workers whose work involves repetitive operations with their hands, physical skill and energy, however much they earn.
The duties tests, one by one
| Exemption | The duties the DOL requires |
|---|---|
| Executive | Primary duty is managing the business or a recognised department; regularly directs the work of at least two full-time employees or the equivalent; can hire or fire, or their recommendations carry particular weight |
| Administrative | Primary duty is office or non-manual work directly related to management or general business operations; uses discretion and independent judgment on matters of significance |
| Learned professional | Primary duty needs advanced knowledge in a field of science or learning, usually gained through a prolonged course of specialised intellectual instruction |
| Creative professional | Primary duty needs invention, imagination, originality or talent in a recognised artistic or creative field |
| Computer | Employed as a systems analyst, programmer, software engineer or similarly skilled worker doing the systems analysis, design or testing duties the DOL lists |
| Outside sales | Primary duty is making sales or obtaining orders or contracts; customarily and regularly works away from the employer's place of business. The fact sheet lists no salary test for this one |
For marketing teams, the administrative and creative tests are where most debates happen. A content manager who sets strategy and makes real decisions may pass the administrative test. A junior who schedules posts from a calendar someone else wrote probably doesn't, even with a smart job title.
How to classify an employee
- Start by assuming the role is non-exempt.
- Check the pay: is it a fixed salary of at least $684 a week (or the computer hourly rate)?
- Write down what the person spends most of their time doing, not what the job advert says.
- Match those duties against one exemption test, and make sure every part of that test is met.
- Check your state law too, because many states set their own overtime rules.
- Review the classification whenever the job changes.
Getting this wrong isn't a paperwork slip. If someone you treated as exempt was non-exempt all along, you can owe overtime for every long week they worked. A time tracking tool for non-exempt staff gives you the hours record you'll need if anyone ever asks.
State law can be stricter
The federal tests are the minimum. The DOL's state minimum wage table shows that some states set their own overtime triggers; California, for example, requires overtime after eight hours in a workday as well as after 40 hours in a week. A role can pass the federal exemption and still be owed overtime under state rules, so always check both before you sign off a contract.
My verdict
If you're unsure, treat the role as non-exempt and pay overtime. It costs far less than back pay. Only call someone exempt when the salary and every part of one duties test are clearly met, and write down why. And remember the overtime tax deduction rules only matter for non-exempt staff who earn overtime; my guide to the no tax on overtime deduction explains what changed for workers.
Want AI doing the heavy lifting in your marketing?
I build the systems that handle the boring 80 percent, so you get your week back. Done properly, with the human kept in.
Frequently asked questions
What is the difference between exempt and non-exempt?
Non-exempt employees must get the minimum wage and overtime at time and a half after 40 hours a week. Exempt employees don't, but only if they meet the salary level, salary basis and duties tests.
What is the salary threshold for exempt employees?
The DOL's Fact Sheet #17A sets the standard salary level at not less than $684 per week, as of October 2026.
Can an hourly employee be exempt?
Usually not, but computer employees can be exempt if paid at least $27.63 an hour and their duties pass the computer employee test.
Does a job title make someone exempt?
No. The DOL says job titles don't determine exempt status; the employee's actual duties and salary must meet the regulations.
Do exempt employees get overtime?
Not under the federal FLSA, but state law can be stricter, so check your state's rules as well.
Who is a highly compensated employee?
Someone doing office or non-manual work who earns total annual compensation of $107,432 or more, including at least $684 a week in salary or fees, and regularly performs at least one exempt duty.
