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Navigating work hours and pay rules in the United States can be complex. The Fair Labor Standards Act (FLSA) is a federal law designed to protect workers. One of its key features is overtime pay, but specific rules and salary thresholds determine who qualifies. This article explains the FLSA’s overtime exemption salary rules and their application.
What is the Fair Labor Standards Act?
Enacted in 1938 during the Great Depression, the Fair Labor Standards Act (FLSA) is a fundamental piece of U.S. labor law. Its primary goal was to establish humane working conditions by setting federal standards for minimum wages, overtime pay, recordkeeping, and limitations on child labor.
Congress aimed to eliminate “labor conditions detrimental to the minimum standard of living necessary for health, efficiency, and general well-being of workers.”
Administered and enforced by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL), the FLSA covers most private and public sector employees—estimated at over 143 million American workers.
Overtime Pay Requirements
A central mandate of the FLSA is overtime pay. The law generally requires employers to pay covered, non-exempt employees overtime compensation for any hours worked beyond 40 in a single workweek. This overtime pay must be at least one and one-half times the employee’s regular rate of pay.
A “workweek” under the FLSA is a fixed, regularly recurring period of 168 consecutive hours (seven 24-hour periods). This period doesn’t have to align with the calendar week and can start on any day or hour.
The FLSA does not limit the total hours an employee aged 16 or older can work in a week. It also doesn’t automatically require overtime for weekend or holiday work—overtime is triggered only by exceeding 40 hours within the defined workweek. Overtime earned must typically be paid on the regular payday for the period in which it was earned.
Understanding “Exempt” Status
While the FLSA’s overtime rule is broad, it doesn’t apply to everyone. Certain categories of employees are “exempt” from minimum wage and/or overtime requirements. The most common exemptions, often called “white-collar” exemptions, apply to individuals employed in a bona fide Executive, Administrative, or Professional (EAP) capacity. Exemptions also exist for certain outside sales and computer employees.
Because these exemptions remove fundamental protections like overtime pay, they are defined narrowly. An employee’s job title alone cannot determine exempt status; specific tests related to pay and job duties must be met. For standard EAP exemptions, employees generally must satisfy three key tests:
- The Salary Basis Test: The employee must be paid a predetermined and fixed salary that doesn’t change based on the quality or quantity of work performed.
- The Salary Level Test: The salary amount must meet a specific minimum threshold set by the DOL.
- The Duties Test: The employee’s primary job duties must involve tasks associated with executive, administrative, or professional work as specifically defined in DOL regulations.
These tests work together. An employee must generally meet all three criteria to qualify for an EAP exemption. Failing to meet even one test typically means the employee is non-exempt and entitled to overtime pay. This structure requiring both a minimum salary and specific duties reflects the FLSA’s intent to exempt only those workers whose roles and compensation genuinely align with bona fide executive, administrative, or professional positions.
The Three Pillars of Exemption
To determine if an employee qualifies for the EAP (“white-collar”) exemption, employers must evaluate their compensation and job responsibilities against the three standard tests established by the DOL.
The Salary Basis Test
The salary basis test centers on how an employee is paid. To meet this test, an employee must regularly receive a predetermined, fixed amount of compensation each pay period (weekly or less frequently). This amount cannot be reduced because of variations in the quality or quantity of work performed.
An exempt employee must receive their full salary for any week in which they perform any work, regardless of the number of days or hours worked. If an employer reduces this predetermined salary due to business needs (like docking pay because there isn’t enough work), the employee is generally not considered paid on a salary basis and may lose the exemption.
However, regulations permit deductions from an exempt employee’s salary under certain limited circumstances without jeopardizing the exemption. These include:
- Absences of one or more full days for personal reasons (other than sickness or disability).
- Absences of one or more full days due to sickness or disability, if deductions are made according to a bona fide sick leave plan.
- Offsets for jury duty, witness fees, or military pay received by the employee.
- Penalties imposed in good faith for violating safety rules of major significance.
- Unpaid disciplinary suspensions of one or more full days for breaking workplace conduct rules.
- In the first or last week of employment (salary can be prorated).
- For unpaid leave taken under the Family and Medical Leave Act (FMLA).
Deductions for partial-day absences are generally not allowed. An employer can, however, reduce an exempt employee’s accrued leave time (like vacation or PTO) for partial-day absences without affecting their exempt status, as long as their salary remains unchanged.
The regulations also allow employers to use nondiscretionary bonuses and incentive payments (like commissions) to satisfy up to 10% of the standard salary level, provided these payments are made at least annually. If the total compensation falls short at year-end, a “catch-up” payment can be made within one pay period. This flexibility acknowledges modern pay practices but still requires the core salary to meet at least 90% of the threshold.
The Salary Level Test
This test is straightforward: an employee’s salary must meet or exceed a specific dollar amount per week, as set by the DOL. This threshold serves as an initial screen; the DOL assumes employees earning below this level are unlikely to be bona fide EAP employees, regardless of their duties.
Current Threshold
In April 2024, the DOL issued a final rule to significantly increase the salary threshold in two phases, starting July 1, 2024, and again on January 1, 2025.
However, on November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated (nullified) the entire 2024 final rule nationwide.
Therefore, the DOL is currently enforcing the salary thresholds established by the previous rule from 2019. As of this article update (May 2025), the currently applicable minimum salary level for the EAP exemption is:
- $684 per week (equivalent to $35,568 per year for a full-time worker).
This $684 per week threshold must be met regardless of whether the employee works full-time or part-time; the minimum salary cannot be prorated for part-time employees. The only exception allowing proration is for employees who work a partial year, such as those on a nine-month academic schedule.
You can find the official confirmation of the currently enforced salary level on the DOL Wage and Hour Division’s Salary Levels page. It’s crucial to check this official source for the latest updates, as the legal situation surrounding the 2024 rule is ongoing, with appeals filed. The DOL’s active updates to its website and fact sheets in response to court rulings highlight the importance of consulting these online resources directly for the most current compliance information.
The Duties Tests
Meeting the salary tests isn’t enough; the employee’s actual job responsibilities must primarily involve exempt duties. “Primary duty” generally means the principal, main, major, or most important duty the employee performs, considering the job as a whole. Time spent performing exempt work is a factor, but not the sole determinant. The specific duties tests vary for each EAP category:
Executive Exemption
- Primary duty must be managing the enterprise or a recognized department/subdivision.
- Must customarily and regularly direct the work of at least two or more other full-time employees (or their equivalent).
- Must have authority to hire or fire, or their recommendations on hiring, firing, advancement, promotion, etc., must be given particular weight.
Administrative Exemption
- Primary duty must be performing office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers. Examples include work in areas like finance, accounting, HR, marketing, quality control, or purchasing.
- Primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.
Professional Exemption
This category includes several types:
Learned Professional
- Primary duty must be performing work requiring advanced knowledge (predominantly intellectual, requiring discretion and judgment) in a field of science or learning (e.g., law, medicine, theology, accounting, engineering, teaching, sciences, pharmacy).
- This knowledge is customarily acquired by a prolonged course of specialized intellectual instruction.
- An advanced degree is the best evidence, but the exemption might apply to those who gained equivalent knowledge through experience and instruction.
Creative Professional
- Primary duty must be performing work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor (e.g., music, writing, acting, graphic arts).
Teachers
- Primary duty is teaching, tutoring, instructing, or lecturing in an educational establishment.
Practice of Law or Medicine
- Holding a valid license and practicing law or medicine, or holding the requisite medical degree and being in an internship/residency program.
These exemptions generally do not apply to “blue-collar” workers performing manual labor or routine tasks, nor to many first responders like police officers, firefighters, and paramedics, regardless of their pay.
For detailed definitions and examples related to the duties tests, consult the DOL’s regulations and relevant Fact Sheets like #17A (Overall EAP), #17B (Executive), #17C (Administrative), and #17D (Professional) available on the WHD website.
The (Now Vacated) 2024 Salary Threshold Rule
Although not currently in effect due to the November 2024 court ruling, it’s helpful to understand the changes the DOL attempted to implement with its April 2024 final rule. This provides context for recent discussions and potential future direction of these regulations.
The 2024 rule aimed to significantly increase the minimum salary thresholds in two steps:
Phase 1 (Intended Effective Date: July 1, 2024)
- Standard Salary Level: Increase from $684/week to $844 per week ($43,888 annually).
- Highly Compensated Employee (HCE) Total Annual Compensation: Increase from $107,432/year to $132,964 per year (including at least $844/week salary/fee).
- Methodology: These initial increases were based on applying the existing 2019 rule’s methodology (20th percentile for standard, 80th for HCE) to updated wage data.
Phase 2 (Intended Effective Date: January 1, 2025)
- Standard Salary Level: Increase further to $1,128 per week ($58,656 annually).
- HCE Total Annual Compensation: Increase further to $151,164 per year (including at least $1,128/week salary/fee).
- Methodology: These levels were based on a new methodology: setting the standard level at the 35th percentile of earnings for full-time salaried workers in the lowest-wage Census Region (the South) and the HCE threshold at the 85th percentile of full-time salaried workers nationally.
Table 1: Intended Salary Threshold Increases Under the Vacated 2024 DOL Rule
| Effective Date | Standard Salary Level (Weekly / Annual Equiv.) | HCE Total Annual Compensation (Annual, incl. min weekly) | Methodology Basis |
|---|---|---|---|
| Before July 1, 2024 (2019 Rule – Currently Enforced) | $684 / $35,568 | $107,432 (incl. $684/week) | 2019 Rule (20th percentile / 80th percentile) |
| July 1, 2024 (Vacated) | $844 / $43,888 | $132,964 (incl. $844/week) | 2019 Rule methodology applied to updated data |
| January 1, 2025 (Vacated) | $1,128 / $58,656 | $151,164 (incl. $1,128/week) | New 2024 Rule methodology (35th percentile / 85th percentile) |
| July 1, 2027+ (Vacated) | To be determined | To be determined | Automatic triennial updates based on then-current data & methodology in the rule |
A major feature of the 2024 rule was the introduction of automatic updates to the salary thresholds every three years, beginning July 1, 2027. This mechanism was intended to prevent the thresholds from becoming outdated due to wage growth, a problem that occurred after the 2004 rule remained unchanged for over 15 years.
However, the Texas court found that the DOL exceeded its authority with these substantial increases and the automatic update mechanism. The court reasoned that the high salary levels effectively displaced the duties test required by the FLSA, making salary the predominant factor for exemption, and that automatic updates circumvented the required notice-and-comment rulemaking process.
As a result, these planned increases and automatic updates are not currently in effect. Employers must adhere to the $684/week standard and $107,432/year HCE thresholds from the 2019 rule.
The Highly Compensated Employee Exemption
Beyond the standard EAP tests, the FLSA regulations include a separate, streamlined test for “Highly Compensated Employees” (HCEs). This exemption acknowledges that employees earning significantly high salaries are more likely to be performing exempt-level duties.
To qualify for the HCE exemption under the currently enforced 2019 rule, an employee must meet these criteria:
Total Annual Compensation Threshold
The employee must earn total annual compensation of at least $107,432.
- This total compensation must include at least $684 per week paid on a salary or fee basis.
- The remainder of the total annual compensation can come from sources like commissions and nondiscretionary bonuses. However, payments for things like board, lodging, insurance, or retirement benefits do not count towards the total annual compensation.
- Nondiscretionary bonuses and incentive payments cannot be used to satisfy the minimum $684 weekly salary portion for HCEs; that amount must be guaranteed. This ensures a baseline level of regular, guaranteed pay, even for highly compensated individuals whose earnings might otherwise be highly variable.
Primary Duty
The employee’s primary duty must include performing office or non-manual work.
Simplified Duties Test
The employee must customarily and regularly perform at least one of the bona fide exempt duties of an executive, administrative, or professional employee. “Customarily and regularly” means more than occasionally but not necessarily constant.
This simplified duties test is the key difference. Unlike the standard EAP tests that require the primary duty to meet specific criteria, the HCE test only requires the regular performance of any one exempt duty. This makes it easier to classify highly paid employees whose jobs might involve a mix of exempt and non-exempt tasks. This structure reflects the assumption that very high pay strongly indicates the employee holds a position of responsibility appropriate for exemption, even if their duties don’t perfectly align with the standard EAP definitions.
For the official definition and current HCE threshold, consult the DOL’s Fact Sheet #17H and the Salary Levels page.
Historical Context of Salary Thresholds
The salary level test wasn’t part of the original 1938 FLSA but was added by DOL regulations in 1940. Since then, the threshold has been updated periodically, though sometimes with long gaps, leading to significant debate and legal challenges. Understanding this history provides context for the current situation:
Pre-2004
For many years, the DOL used a “long test” and “short test” system with different salary levels and duties requirements.
The 2004 Rule
This major overhaul simplified the system, establishing a single standard duties test and setting the standard salary level at $455 per week ($23,660 annually). It also introduced the modern HCE exemption with a threshold of $100,000 per year. These levels remained unchanged for over 15 years, causing the salary test to become less effective as wages rose.
The 2016 Attempt
Recognizing the 2004 levels were outdated, the Obama administration’s DOL issued a rule in 2016 to more than double the standard threshold to $913 per week ($47,476 annually) and raise the HCE threshold to $134,004 per year. However, this rule was challenged in court, and a federal judge issued a nationwide injunction preventing it from taking effect. It was never enforced.
The 2019 Rule (Currently Enforced Standard)
Effective January 1, 2020, the Trump administration’s DOL issued a new rule implementing a more moderate increase. This rule raised the standard salary level to $684 per week ($35,568 annually) and the HCE threshold to $107,432 per year. It used the 20th percentile of earnings in the lowest-wage region (South) and/or retail sector for the standard level, and the 80th percentile nationally for the HCE level. This rule also formally allowed up to 10% of the standard salary level to be met with nondiscretionary bonuses/incentives. This 2019 rule is the one currently being enforced following the vacatur of the 2024 rule.
The 2024 Rule (Vacated)
As detailed earlier, this rule attempted much larger increases ($844/week then $1,128/week standard; $132,964/year then $151,164/year HCE) and introduced automatic triennial updates. It was vacated by a federal court in November 2024.
Table 2: Recent History of FLSA EAP & HCE Salary Thresholds
| Rule Year (Effective Date) | Standard Salary Level (Weekly / Annual Equiv.) | HCE Total Annual Compensation (Annual, incl. min weekly) | Status |
|---|---|---|---|
| 2004 (Effective Aug 2004) | $455 / $23,660 | $100,000 (incl. $455/week) | Superseded |
| 2016 (Proposed, Never Enforced) | $913 / $47,476 | $134,004 (incl. $913/week) | Enjoined by court, never took effect |
| 2019 (Effective Jan 2020) | $684 / $35,568 | $107,432 (incl. $684/week) | Currently Enforced |
| 2024 (Intended Effective July 2024/Jan 2025) | $844 / $43,888 then $1,128 / $58,656 | $132,964 then $151,164 (incl. new weekly minimums) | Vacated by court (Nov 2024) |
This history reveals a pattern: the DOL struggles to keep the salary threshold current with wage growth, and significant attempts to update it often face legal hurdles. The differing methodologies used over time (e.g., 20th percentile vs. 35th percentile) also show evolving policy choices about how high the salary bar should be set to effectively distinguish exempt from non-exempt workers. This cycle of updates and challenges creates ongoing uncertainty for both employers and employees.
Special Cases: Exemptions from Salary Tests
While the salary basis and salary level tests are central to the EAP exemptions, the FLSA recognizes that they aren’t suitable for every type of job. Certain professions have special rules, and some are exempt from the salary tests altogether, relying primarily on the nature of their duties. This reflects a judgment that the inherent responsibilities or typical compensation structures of these roles make the standard salary tests unnecessary or impractical.
Outside Sales Employees
Employees whose main job is making sales or obtaining orders/contracts, and who primarily work away from the employer’s office(s), are exempt. Critically, outside sales employees are not subject to either the salary basis test or the salary level test. Their exemption depends solely on meeting the duties test. See DOL Fact Sheet #17F: Outside Sales Employees Under the FLSA.
Teachers
Employees whose primary duty is teaching, tutoring, instructing, or lecturing to impart knowledge in an educational establishment are exempt. Like outside sales, teachers are not subject to the salary basis or salary level tests. Certain academic administrative employees may also qualify under special rules that might not require meeting the standard salary level.
Employees Practicing Law or Medicine
Licensed attorneys and physicians (including medical interns and residents engaged in a professional program) who are actively practicing their profession are exempt. They are also not subject to the salary basis or salary level tests.
Computer Professionals
Certain computer employees (like systems analysts, programmers, software engineers) can be exempt under specific rules (found in FLSA Section 13(a)(1) and Section 13(a)(17)). They must meet a duties test involving tasks like systems analysis, design, development, testing, or modification of computer systems or programs. Unlike other EAP employees, they can qualify for exemption if paid EITHER:
- On a salary or fee basis of at least the standard $684 per week (currently enforced threshold), OR
- On an hourly basis of at least $27.63 per hour.
Notably, this $27.63 hourly rate has remained unchanged through recent DOL rule updates, including the vacated 2024 rule, suggesting it operates under a different statutory provision or update mechanism than the standard salary level. See DOL Fact Sheet #17E: Exemption for Computer-Related Occupations Under the FLSA.
Federal vs. State Law Conflicts
The FLSA sets the floor, not the ceiling, for worker protections. Many states, and even some cities, have enacted their own wage and hour laws that provide greater protections than federal law. This is particularly common regarding minimum wage, overtime calculations, and the criteria for overtime exemptions.
The most important principle to remember is this: Employers must comply with both federal and state (and local) laws. When these laws differ, the employer must follow the standard that is more beneficial to the employee.
Here are common ways state laws can differ from and exceed FLSA requirements for overtime exemptions:
Higher Salary Thresholds
Several states require a significantly higher minimum salary for an employee to be classified as exempt under state law compared to the federal $684 per week ($35,568/year) standard. For example, as of late 2024/early 2025, states like California ($66,560/year), Washington ($67,724.80/year), Colorado ($55,000/year), New York (varying by region, up to $62,400/year for E&A), and Alaska ($48,796.80/year) all have higher thresholds. In these states, simply meeting the federal minimum salary is not enough to claim the exemption. Some states, like Washington, even have mechanisms to automatically increase their thresholds annually based on the state minimum wage, creating an even wider gap with the often static federal level. This growing divergence creates a complex patchwork for national employers.
Stricter Duties Tests
State law might impose more stringent requirements for the type or amount of exempt work an employee must perform compared to the federal duties tests.
Daily Overtime
Unlike the FLSA, which only triggers overtime after 40 hours in a week, some states mandate overtime pay for hours worked over a certain number in a single day (commonly 8 hours). States with daily overtime rules include California, Colorado, Alaska, Nevada, and Oregon. California even requires double-time pay for hours worked beyond 12 in a day or beyond 8 on the seventh consecutive day of work.
Bonus Restrictions
Some states may not permit employers to use nondiscretionary bonuses or commissions to satisfy any portion of the state’s minimum salary requirement for exemption, even though the FLSA allows up to 10% for the standard exemption.
Table 3: Examples of State Salary Thresholds Exceeding Federal Standard (as of late 2024 / early 2025)
| State | Current Annual Salary Threshold (EAP) | Current Weekly Equivalent | Notes |
|---|---|---|---|
| Federal Standard (Currently Enforced) | $35,568 | $684 | — |
| Alaska | $48,796.80 | $938.40 | 2x state minimum wage |
| California (Employers with 26+ employees) | $66,560 | $1,280 | 2x state minimum wage |
| Colorado | $55,000 | $1,057.69 | Scheduled annual increases |
| New York (NYC, Long Island & Westchester) | $62,400 | $1,200 | Applies to Executive & Administrative exemptions only |
| New York (Rest of State) | $58,458.40 | $1,124.20 | Applies to Executive & Administrative exemptions only |
| Washington | $67,724.80 | $1,302.40 | Tied to state minimum wage multiplier (1.75x in 2024, rising to 2.5x by 2028) |
This table illustrates why employers cannot rely solely on the federal FLSA threshold. In states like California or Washington, paying an employee $40,000 per year would meet the federal salary level test ($684/week) but fall far short of the state requirement, making the employee non-exempt under state law and thus entitled to state overtime protections. Because the employer must follow the law more favorable to the employee, the higher state salary threshold (and potentially stricter duties tests or daily overtime rules) would apply. This means that even future increases to the federal threshold might be irrelevant in states with already higher, and potentially automatically adjusting, standards.
Finding Authoritative Information
The rules surrounding FLSA exemptions and salary thresholds are complex and subject to change due to new regulations, court decisions, and differing state laws. It is essential for both employers and employees to rely on authoritative, up-to-date sources.
The primary source for information on federal FLSA requirements is the U.S. Department of Labor (DOL), Wage and Hour Division (WHD). Key online resources include:
- Wage and Hour Division Home
- FLSA Main Information Page
- Overtime Pay Information
- Current Salary Levels Page (crucial for the latest enforced thresholds, reflecting court decisions)
WHD Fact Sheets
These provide detailed explanations of specific topics. Relevant sheets include:
- Fact Sheet #17A: Overview of EAP Exemptions
- Fact Sheet #17G: Salary Basis Requirement
- Fact Sheet #17H: Highly Compensated Employees
- Fact Sheet #17D: Professional Exemption
- Fact Sheet #17E: Computer Employees
- Fact Sheet #17F: Outside Sales Employees
Other valuable resources:
- FLSA Regulations (Title 29, Part 541) – For the official legal text
- Federal Register – Where official notices of proposed and final rules are published
Given the recent legal challenges and the dynamic nature of state laws, checking these official DOL resources directly is the best way to ensure access to the most current and accurate information regarding FLSA salary thresholds and exemption requirements. The DOL actively updates its online guidance to reflect court decisions, making these web resources particularly valuable. For questions about specific state laws, consult the relevant state labor agency website.
Our articles make government information more accessible. Please consult a qualified professional for financial, legal, or health advice specific to your circumstances.
