Exempt vs Non-Exempt Employees: 2026 Overtime Rules
Somewhere in your offer letter or HR portal there may be a label: "exempt" or "non-exempt." That one word decides whether you're legally owed overtime pay when you work more than 40 hours in a week.
Both terms come from the federal Fair Labor Standards Act (FLSA). Your status turns on a set of tests, a salary threshold the Department of Labor is enforcing in 2026, and in some states a higher threshold on top. If the label on your job looks wrong, there's also a clear path for challenging it.
Not legal advice. This is a general explanation of federal and selected state rules. For your specific situation, contact the DOL Wage and Hour Division, your state labor department, or an employment attorney.
The Short Version
- Non-exempt employees are covered by the FLSA's overtime rule: at least 1.5 times their regular rate of pay for hours over 40 in a workweek.
- Exempt employees aren't owed overtime under federal law.
- To be exempt under the common "white-collar" exemptions, an employee generally has to pass three tests: the salary basis test, the salary level test, and a duties test.
- Being paid a salary doesn't make you exempt. Your job duties and pay level have to qualify too.
The Three Tests (Federal)
The Department of Labor's Fact Sheet #17A sets these out for the executive, administrative, professional, computer and outside sales exemptions.
1. Salary basis test
You're paid a predetermined, fixed salary that isn't reduced because of the quality or quantity of your work. If your employer routinely docks your pay for partial-day absences in ways the rules don't allow, that can break the salary basis.
2. Salary level test
Your salary must be at least the federal minimum for exemption. See the next section for the 2026 figure.
3. Duties test
Your primary duty must fit one of the exemption categories. In simplified terms:
| Exemption | Primary duty (simplified) |
|---|---|
| Executive | Managing the business or a recognized department. Regularly directs the work of at least two full-time employees (or equivalent), and has real input on hiring, firing or promotions |
| Administrative | Office or non-manual work directly related to management or general business operations, including exercising discretion and independent judgment on significant matters |
| Learned professional | Work requiring advanced knowledge in a field of science or learning, usually acquired through a prolonged course of specialized study |
| Creative professional | Work requiring invention, imagination, originality or talent in a recognized artistic or creative field |
| Computer employee | Systems analyst, programmer, software engineer or similar, doing work such as systems analysis, design, or programming |
| Outside sales | Making sales or getting orders away from the employer's place of business (no salary test applies) |
Job titles don't settle this. An "Operations Manager" who mainly does routine data entry may not meet the administrative duties test.
The Federal Salary Threshold in 2026
The DOL currently enforces a standard salary level of $684 per week ($35,568 per year) for the white-collar exemptions, according to its earnings thresholds page. Other federal thresholds:
| Threshold | Amount |
|---|---|
| Standard salary level | $684/week ($35,568/year) |
| Highly compensated employees (HCE), total annual compensation | $107,432/year, including at least $684/week in salary |
| Computer employees paid hourly | $27.63/hour |
Up to 10% of the standard salary level can be met with nondiscretionary bonuses and incentive payments (including commissions) paid at least annually.
What happened to the 2024 rule?
In April 2024 the DOL issued a rule raising the threshold to $844 per week on July 1, 2024 and $1,128 per week on January 1, 2025, with automatic updates every three years. On November 15, 2024, a federal court in the Eastern District of Texas vacated that rule nationwide (Texas v. U.S. Department of Labor), and on December 30, 2024 the Northern District of Texas vacated it too (Flint Avenue, LLC v. DOL). The Fifth Circuit dismissed the appeals in both cases on May 5 and May 7, 2026, according to the DOL's Federal Register notice.
On May 15, 2026, the DOL published (and announced the day before) a technical amendment in the Federal Register that removed the vacated 2024 text and restored the 2019 regulations. So the $684-per-week level is both the enforced level and the text in the regulations. The higher $844 and $1,128 figures you may still see online aren't in effect.
Check the DOL's salary levels page for any new rulemaking before relying on this.
Who the salary test doesn't apply to
DOL notes the salary thresholds don't apply to certain jobs, including doctors, lawyers, teachers and outside sales employees. Those roles can be exempt based on duties alone.
State Thresholds: Often Higher
States can set stricter rules. When state and federal law both apply, the employer must follow whichever is more protective for the worker. Some examples for 2026:
| State | 2026 exempt salary minimum | Source |
|---|---|---|
| California | Twice the state minimum wage for full-time work: $70,304/year ($1,352/week) | CA Labor Commissioner FAQ |
| New York (executive and administrative) | $1,275/week in NYC, Long Island and Westchester. $1,199.10/week elsewhere in the state | NY DOL minimum wage FAQ |
| Washington | $1,541.70/week ($80,168.40/year) for all employers | WA L&I, WAC 296-128-545 |
A few other states also exceed the federal level, and some have different duties tests or daily overtime. California, for example, generally requires overtime after 8 hours in a day. Check your state labor department.
"Salaried Non-Exempt" Is Normal
Plenty of people are caught off guard to learn you can be paid a salary and still be non-exempt. A salaried non-exempt employee gets a fixed salary for a set number of hours and is still owed overtime for hours over 40. That's common in roles that don't meet a duties test, or that pay below the threshold.
To understand what your salary works out to per hour, which is also the base for overtime math, use our hourly to salary calculator.
Signs You May Be Misclassified
None of these prove misclassification on their own, but each one deserves a closer look:
- Your salary is below the federal or state threshold, but you're labeled exempt.
- Your work is mostly routine and follows set procedures, with little real discretion, but your role is classified as administrative.
- You're called a "manager" but don't actually direct the work of two or more full-time employees.
- Your pay gets docked for partial days in ways that look like hourly pay.
- You're an "assistant" or "coordinator" working 50 or more hours a week with no overtime, and your duties are clerical.
- A recent title change came with no change in duties, but you lost overtime eligibility.
What to Do If You Think You're Misclassified
- Keep records. Write down your hours each day, and keep pay stubs, your job description and examples of your actual duties.
- Ask HR, in writing, how your role meets the exemption: "Could you tell me which FLSA exemption my role falls under?" Sometimes the answer resolves it.
- Contact the DOL Wage and Hour Division. Filing a complaint is free and confidential, and WHD says it doesn't ask about immigration status. Retaliation for filing is illegal under the FLSA.
- Or contact your state labor department, especially if state law is more protective.
- Consider an employment attorney. The FLSA generally allows two years to recover back wages, or three years for willful violations.
Frequently Asked Questions
What's the difference between exempt and non-exempt?
Non-exempt employees must be paid at least 1.5 times their regular rate for hours over 40 in a workweek. Exempt employees aren't owed federal overtime because their salary and duties meet an FLSA exemption.
What's the exempt salary threshold in 2026?
Federally, $684 per week ($35,568 a year), plus $107,432 total annual compensation for the highly compensated employee test. Several states set higher levels, including California ($70,304) and Washington ($80,168.40).
Was the 2024 overtime rule cancelled?
Yes. A federal court vacated it in November 2024, and the DOL formally restored the 2019 regulations on May 15, 2026.
Can a salaried employee get overtime?
Yes. If they're non-exempt, because their pay is below the threshold or their duties don't qualify, they're owed overtime even though they're salaried.
Does my job title make me exempt?
No. Exemption depends on your actual duties and pay, not your title.
Can my employer change me from exempt to non-exempt?
Yes, employers can reclassify roles, for example after reviewing duties or when a state threshold rises. Ask how it affects your pay, hours tracking and benefits.
Keep Going
Your classification usually shows up first in your offer, so see how to read a job offer letter for the other terms to check. If you're weighing a contract role instead, overtime rules don't apply to independent contractors at all; our W-2 vs 1099 guide and W-2 vs 1099 calculator compare the two. For an hourly view of your salary, use the hourly to salary calculator, and find more pay topics in our salary guides.
General information only, not legal advice.
Sources
- U.S. DOL, WHD, "Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the FLSA": https://www.dol.gov/agencies/whd/fact-sheets/17a-overtime
- U.S. DOL, WHD, "Earnings thresholds for the Executive, Administrative, and Professional exemption": https://www.dol.gov/agencies/whd/overtime/salary-levels
- Federal Register, May 15, 2026, "Defining and Delimiting the Exemptions ...; Implementation of Federal Court Judgments": https://www.federalregister.gov/documents/2026/05/15/2026-09839/defining-and-delimiting-the-exemptions-for-executive-administrative-professional-outside-sales-and
- U.S. DOL news release, May 14, 2026: https://www.dol.gov/newsroom/releases/whd/whd20260514
- U.S. DOL, WHD, "How to File a Complaint": https://www.dol.gov/agencies/whd/contact/complaints
- California Labor Commissioner, "Overtime Exemptions FAQ": https://www.dir.ca.gov/dlse/faq_overtimeexemptions.htm
- New York State DOL, "Minimum Wage Frequently Asked Questions": https://dol.ny.gov/minimum-wage-frequently-asked-questions
- Washington L&I, "Changes to Overtime Rules Q&A": https://lni.wa.gov/workers-rights/wages/overtime/changes-to-overtime-rules-q-a and WAC 296-128-545: https://apps.leg.wa.gov/WAC/default.aspx?cite=296-128-545
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