FLSA Overtime Rules: Who Qualifies and How It Works

The Fair Labor Standards Act (FLSA) is the federal law governing minimum wage, overtime pay, and other labor standards in the United States. Under the FLSA, most workers are entitled to overtime pay at 1.5 times their regular rate for hours worked beyond 40 in a workweek. However, certain employees are “exempt” from overtime requirements if they meet specific tests.

This article explains the law factually for educational purposes. It is not legal advice. For questions about your specific situation, consult your employer's HR department or the U.S. Department of Labor Wage and Hour Division.

The Federal Salary Threshold

To qualify for a “white collar” overtime exemption (executive, administrative, or professional), an employee must be paid on a salary basis at or above the federal minimum threshold. As of the most recent DOL rule, this threshold is $684 per week ($35,568 annually). Employees earning below this threshold are generally non-exempt and entitled to overtime regardless of job duties.

Note: The DOL has proposed and implemented threshold changes in recent years. The $684/week figure reflects the threshold in effect under the 2019 final rule. Verify the current threshold at dol.gov/agencies/whd/flsa as rules may have been updated since this article was published.

The Three-Test Framework for Exemption

Meeting the salary threshold alone does not make an employee exempt. The FLSA applies a three-part test. All three must be met for an exemption to apply:

Job title alone does not determine exempt status. A “manager” who spends most of their time performing non-managerial tasks may not meet the duties test for the executive exemption.

Common Exemption Categories

• Executive exemption — Primary duty is managing the enterprise or a department, customarily directs the work of 2+ employees, has authority to hire/fire or recommend such actions.
• Administrative exemption — Primary duty involves office/non-manual work related to management or general business operations, exercises discretion and independent judgment on significant matters.
• Professional exemption — Primary duty requires advanced knowledge in a field of science or learning, customarily acquired by prolonged specialized study (learned professional); or primary duty requires invention, imagination, or talent in a recognized creative field (creative professional).
• Computer employee exemption — Paid at least $684/week (salary) or $27.63/hour, with primary duties in systems analysis, programming, or software engineering.
• Highly Compensated Employee (HCE) — Total annual compensation of $107,432 or more, with at least one exempt duty from the executive, administrative, or professional categories.

State Variations

Several states have their own overtime laws with higher salary thresholds or different rules. For example, California, New York, Washington, and Colorado have established higher minimum salary requirements for exempt employees than the federal standard. When state and federal law differ, the standard more protective to the employee applies.

Always check your state's labor department in addition to federal FLSA rules.

Worked Overtime Calculation Example

Suppose a non-exempt employee earns $25.00 per hour and works 47 hours in a given workweek:

The overtime rate is 1.5 times the employee's “regular rate of pay.” For hourly workers, this is straightforward. For salaried non-exempt workers, the regular rate is calculated by dividing the weekly salary by the number of hours the salary is intended to cover (usually 40). Use the overtime calculator or time and a half calculator to run your own numbers.

Common Misconceptions

• “Salaried = exempt” — Not true. Being paid a salary is necessary but not sufficient for exemption. The duties test must also be met.
• “My employer says I'm exempt” — Misclassification is common. Exemption is determined by law, not by employer designation.
• “Overtime is optional” — Employers may require overtime. They cannot, however, refuse to pay the overtime premium for non-exempt workers.
• “Comp time replaces overtime pay” — In the private sector, compensatory time off in lieu of overtime pay is generally not permitted under the FLSA.

Sources and Notes

• U.S. Department of Labor — Wage and Hour Division, FLSA overview and fact sheets at dol.gov/agencies/whd/flsa
• 29 CFR Part 541 — Defining and delimiting the exemptions for executive, administrative, professional, computer and outside sales employees
• Salary thresholds cited reflect the 2019 final rule ($684/week). The DOL periodically proposes changes; verify current figures at dol.gov.
• This article is for general educational purposes and does not constitute legal advice.