FLSA exempt vs non-exempt
Also known as: FLSA classification, Exempt employee, Non-exempt employee, Salaried vs hourly
Under the US Fair Labor Standards Act (FLSA), employees are classified as exempt (salaried, not entitled to overtime) or non-exempt (hourly, entitled to overtime at 1.5× regular rate for hours over 40 in a workweek). Misclassification — paying as exempt when the role does not meet the legal test — is one of the most common and expensive US employment law violations.
FLSA classification is not about job title or whether you call someone "salaried" — it's a legal test based on duties and pay. An employee qualifies as exempt only if they (1) earn at least the salary threshold ($43,888/year as of July 2024, scheduled to rise), (2) are paid on a salary basis, and (3) primarily perform exempt duties under one of the recognized exemptions (executive, administrative, professional, computer employee, outside sales). Calling someone "salaried" does not make them exempt — failing any of the three prongs makes them legally non-exempt regardless of how they are paid.
The main exemption categories
- Executive exemption — manages 2+ employees, has hiring/firing authority, manages an organizational unit
- Administrative exemption — performs office work directly related to management or business operations, exercises independent judgment on significant matters
- Professional exemption — work requiring advanced knowledge in a field of science or learning (typically requiring a degree)
- Computer employee exemption — systems analysts, software engineers, programmers paid at the FLSA computer professional rate
- Outside sales exemption — primarily engaged in making sales away from the employer's place of business
What non-exempt status means in practice
Non-exempt employees must be paid at least the federal minimum wage for all hours worked and overtime at 1.5× their regular rate for hours over 40 in a workweek. Time tracking is mandatory — employers must record hours, breaks, and overtime accurately. Failure to pay required overtime triggers back-wage liability (typically 2-3 years of wages), liquidated damages (doubling the amount), and attorney fees in collective actions.
Frequently asked questions
- What is the difference between exempt and non-exempt under FLSA?
- Exempt employees are salaried, do not receive overtime, and must meet specific duty and pay tests. Non-exempt employees are paid hourly (or salaried below the threshold) and receive 1.5× overtime for hours over 40 per workweek.
- Can I just call my employee "salaried" to avoid overtime?
- No — calling someone salaried does not make them exempt. They must (1) earn the salary threshold, (2) be paid on a salary basis, and (3) primarily perform exempt duties. Failing any of these makes them legally non-exempt regardless of pay structure.
- What's the FLSA salary threshold?
- $43,888/year as of July 2024, with planned increases. The threshold is set by the Department of Labor and adjusts periodically. Anyone earning less is non-exempt regardless of duties.
- Does FLSA apply to Georgian employees?
- No — FLSA is a US federal law. Georgian employees are governed by the Georgian Labor Code. If your company has US employees via a US entity or EOR, FLSA applies to those US workers.