Reference

Exempt vs non-exempt: who gets overtime.

In the US, your eligibility for overtime pay depends on three tests under the Fair Labor Standards Act. The salary you're paid is one of them; the other two are about job duties.

The three tests

Under the US Fair Labor Standards Act (FLSA), an employee is “exempt” from overtime pay only if they meet all three tests:

Salary basis test. Paid a fixed salary that doesn't vary with hours or work quality.
Salary level test. Salary at or above $58,656 per year (2024 threshold; up from $35,568 prior to mid-2024).
Duties test. Job responsibilities meet one of the FLSA exemption categories: executive, administrative, professional, computer professional, outside sales, or highly compensated employee.

Employees who fail any one of the three tests are non-exempt and must be paid 1.5× their regular rate for hours over 40 per week.

The salary threshold history

Effective date	Threshold (annual)	Threshold (weekly)	Notes
2004	$23,660	$455	Last revision before 2019
Jan 2020	$35,568	$684	Trump-era revision
July 2024	$43,888	$844	Biden-era phase 1
January 2025 (planned)	$58,656	$1,128	Biden-era phase 2 (under legal challenge)

The Biden-era 2024/2025 increases have been subject to legal challenges; specific implementation has been partially blocked in some federal districts. Confirm with HR or a legal source for current applicable threshold.

What classification means in practice

Exempt employee: Paid the same weekly amount regardless of hours worked. No overtime premium. Often described as “salaried”.
Non-exempt employee: Paid hourly or salaried, but always entitled to 1.5× overtime for hours above 40/week. Often described as “hourly” even when paid a salary.

The distinction matters because exempt employees who work 50–60-hour weeks effectively earn substantially less per hour than their salary suggests. A $80,000-per-year exempt employee working 55h/week is earning ~$28/hour realised, vs the $38/hour the 40h/52w convention implies.

The duties tests

Executive: Manages 2+ employees; has hiring/firing authority or significant input.
Administrative: Office or non-manual work directly related to management; exercises discretion and independent judgement.
Professional: Work requires advanced knowledge in a field of science or learning, customarily acquired through prolonged academic instruction. Lawyers, doctors, engineers, teachers.
Computer professional: Software analysis, development, design, modification. Salary OR hourly threshold ($27.63+/hour). Many software engineers fall here.
Outside sales: Primary duty is sales away from the employer's place of business.
Highly compensated employee: Total compensation $151,164+ (2024); only one duties-test element required.

The misclassification trap

Many employees are misclassified. A common pattern: a small business gives an employee a “salary” of $50k and assumes they're exempt. The employee fails the duties test (no managerial authority, no independent judgement), which means they should be paid hourly with overtime. The employer can be liable for back overtime pay over the past two or three years, plus liquidated damages equal to the unpaid overtime. Employees in doubt about their classification can file a Wage and Hour Division complaint or consult an employment lawyer.

Outside the US

Most other jurisdictions use simpler frameworks:

UK: Working Time Regulations cap weekly hours at 48 (opt-out available); overtime not federally mandated above the cap.
EU: Working Time Directive sets a 48-hour weekly maximum; member states implement overtime differently.
India: Factories Act caps weekly hours at 48; overtime at 2× the regular rate is mandated.
Australia: Fair Work Act sets a 38-hour standard week; overtime depends on the applicable industry award.