Salaried Employees and Overtime Pay
Being paid a salary does not automatically mean you are exempt from overtime. Millions of salaried workers are misclassified every year. If your job duties do not meet the legal standard for exemption, you may be owed back wages for every overtime hour you worked, regardless of what your employer told you or what your offer letter says.
WORKERS REPRESENTED NATIONWIDE
IN WAGES RECOVERED
CONSULTATION FEE
What Is a Salaried Worker?
A salaried worker is paid a fixed amount each pay period regardless of how many hours they work. That pay structure is common across a wide range of industries and job levels, from entry-level office roles to senior management positions. The salary format is also one of the most frequently misused tools employers rely on to avoid paying overtime.
Receiving a salary is a description of how you are paid, not a legal determination of your overtime status. The exemption from overtime is a separate legal question with specific requirements that must be independently satisfied. Pay structure alone does not answer it.
Do Salaried Employees Qualify for Overtime?
Many do. The Fair Labor Standards Act requires overtime pay for most employees who work more than 40 hours in a workweek. The exemptions are specific and narrow. To qualify as exempt, an employee must pass two separate tests: a salary test and a duties test. Both must be met. If either fails, the employee is entitled to overtime. Many employers apply the exemption broadly, assuming that any salaried worker above a certain pay level is exempt. That assumption is frequently wrong, and the worker typically gets shorted as a result.
- As of January 1, 2026, the federal salary threshold for overtime exemption is $684 per week ($35,568 per year)
- Several states set higher thresholds: California requires $1,352 per week, Washington requires $1,541.70 per week, and New York City requires $1,275 per week
- Earning above the threshold does not automatically exempt a worker; actual job duties must also meet strict legal criteria
- Job titles like Manager, Supervisor, or Senior Associate do not determine exemption status; what you actually do every day does
- A written contract or offer letter agreeing to exempt status does not override the legal test
- The lookback period for unpaid overtime claims is generally two years, or three years if the violation was willful
The Two Tests That Determine Overtime Eligibility
Whether a salaried worker is exempt from overtime is not a matter of job title, pay level, or employer preference. Federal law sets a two-part test. Both parts must be satisfied. If either one fails, the worker is entitled to overtime for every hour worked past 40 in a workweek.
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The Salary Threshold Test
The first test is straightforward. If you are paid less than the minimum weekly salary required for an exempt employee, you are entitled to overtime. Your job title and duties do not matter at that point. The federal floor is $684 per week ($35,568 per year). Several states set higher minimums: California requires $1,352 per week, Washington requires $1,541.70 per week, and New York City requires $1,275 per week. If your salary falls below the threshold that applies in your state, overtime was owed for every hour past 40, regardless of how your employer classified you.
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The Duties Test
Earning above the salary minimum is not enough on its own. The second test looks at what the worker actually does every day. Federal law recognizes three categories of exempt employees: executive, administrative, and professional. Each has specific criteria that must be met. A worker whose daily tasks do not match those criteria is not exempt, regardless of their title or pay level.
The Three Exemption Categories
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Executive Exemption: Is the employee in charge of running something?
Earning above the salary minimum is not enough on its own. The second test looks at what the worker actually does every day. Federal law recognizes three categories of exempt employees: executive, administrative, and professional. Each has specific criteria that must be met. A worker whose daily tasks do not match those criteria is not exempt, regardless of their title or pay level.
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Administrative Exemption: Does the worker make independent business decisions?
The administrative exemption requires that the work directly relate to management or general business operations, and that the worker exercise genuine independent judgment on matters of significance. Following a checklist, processing routine requests, and carrying out procedures set by others do not qualify. The exemption is about decision-making authority, not job function or department assignment.
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Professional Exemption: Does the role require advanced formal education?
The professional exemption applies to occupations that require a high level of formal education or specialized training as a standard entry requirement, such as licensed attorneys, physicians, engineers, and certified public accountants. If the work can be learned on the job without a degree or years of formal study, it likely does not meet this standard. Many workers labeled as professionals in their job title do not qualify for the professional exemption under the legal test.
What This Means For You
Most people who read those three exemption descriptions recognize quickly that their actual job does not fit any of them. If a title like Manager, Coordinator, or Senior Associate has been applied to work that is largely routine, supervised, and does not involve independent authority over personnel or business decisions, the exemption likely does not hold up. A review of the actual duties is often enough to determine whether the classification was ever legally supportable.
Federal Law
How Overtime Is Calculated for Salaried Workers
When a salaried worker is entitled to overtime, the calculation follows a specific formula. You take the weekly salary and divide it by 40 hours to get the regular rate of pay. Overtime is then owed at one and a half times that regular rate for every hour worked past 40 in the workweek. In some cases, when an employee is told they are salaried, the company does not track their working hours at all!
Here's An Example of A Salaried Worker and How Overtime Works
- 1Regular Rate: $900 / 40 hours = $22.50 per hour
- 2Overtime Rate: $22.50 x 1.5 = $33.75 per overtime hour
- 2Overtime hours that week: 52 - 40 = 12 overtime hours
- 2Overtime owed that week: 12 x $33.75 = $405
What This Means For You
Think about the last two years at your job. How many weeks did you work past 40 hours? Late nights, early mornings, working through lunch, checking in on weekends. You accepted your salary and kept going, because that is what salaried workers do. What most people in that situation do not know is that every one of those extra hours may have been legally required to be paid. The salary did not cover them if the exemption did not apply, and the amount owed kept growing, week after week, while nothing on the pay stub indicated anything was wrong.
Common Ways Salaried Employees Are Misclassified
Misclassification of salaried workers as exempt takes several common forms. Recognizing the pattern is often the first step to understanding whether a claim may exist.
Title Without Authority
An employer assigns a title like Manager or Supervisor but the worker has no real authority to hire, fire, or make meaningful personnel decisions. They spend most of their time doing the same work as the people they nominally oversee. The title does not create an exemption. The actual duties do. This pattern is especially common in retail, food service, and healthcare, where working supervisors frequently hold manager titles without the decision-making power the exemption requires.
Reclassification Without Pay
Recent increases to salary thresholds required many employers to reclassify salaried workers as hourly. Some employers made the change on paper but did not begin tracking hours accurately or paying overtime consistently. If your status was changed to hourly but your employer still expects extra hours without full overtime pay, that is a violation. And the reclassification going forward does not erase what was owed before the change.
Above-Threshold Assumption
Some employers assume that any employee earning above the salary threshold is automatically exempt. That is not how the law works. The duties test must also be independently satisfied. Paying a higher salary does not eliminate the overtime obligation if the worker's actual tasks are non-exempt. This error tends to appear in professional services, finance, and technology, where workers earn well above the federal floor but perform work that is largely directed and routine.
Common Industries
Industries Where Salaried Worker Misclassification Is Most Common
Misclassification of salaried employees as exempt from overtime appears across nearly every industry. Josephson Dunlap has handled these cases for workers in all of these sectors and others.
- Retail and Restaurant Management
- Healthcare and Clinical Services
- Financial Services and Banking
- Technology and Software
- Oil, Gas, and Energy
- Construction and Engineering
- Logistics and Transportation
- Insurance and Real Estate
- Hospitality and Hotels
- Education and Training
- Call Centers and Customer Service
- Administrative and Office Roles
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