Exempt vs. Non-Exempt Employees: The Tests, Seven Examples and the Cost of Getting It Wrong

Exempt and non-exempt describe whether the Fair Labor Standards Act minimum wage and overtime rules apply to a job. Here is the comparison side by side, which test applies to which exemption, seven jobs run through the tests, and the back pay a wrong label can create.

Written and reviewed by Abdul BaseerAccountantPublished 03 Nov 2026·Updated 03 Nov 2026·Sources checked 03 Nov 2026·8 min read

The short answer

A non-exempt employee must get overtime at 1.5 times the regular rate for hours over 40 in a workweek; an exempt employee does not, but only if the job passes the Department of Labor tests, and a salary or a title alone never decides it.

Most white-collar exemptions need a salary of at least $684 a week plus a duties test; outside sales, teachers, lawyers and doctors have no salary level test, and computer employees can qualify at $27.63 an hour.
Exempt does not mean salaried, and non-exempt does not mean hourly: a salaried employee who fails the tests is non-exempt.
In an illustration of $1,000 a week and 50 hours every week, a wrong label means $39,000 of unpaid overtime over two years, $78,000 with equal liquidated damages, before attorney’s fees.

On this page

Exempt vs. non-exempt
Side by side
Which tests apply to which exemption
Seven jobs, run through the tests
What a wrong classification can cost
For employers
For employees
Common mistakes
Questions
Sources

1.5×the regular rate for non-exempt hours over 40

$684a week, the salary level in DOL’s fact sheet

$78,000owed after 2 years in the first example below

3 yearslook-back for a willful violation

What is the difference between exempt and non-exempt?

An exempt employee is one who is exempt from the Fair Labor Standards Act (FLSA) minimum wage and overtime rules, because the job passes the Department of Labor’s tests. A non-exempt employee is everyone else covered by the Act. Non-exempt employees must be paid at least the federal minimum wage and not less than one and a half times their regular rate for hours over 40 in a workweek. Exempt employees are not entitled to either under the FLSA.

Exempt does not mean salaried, and non-exempt does not mean hourly. A salaried employee who fails the tests is non-exempt, and in a few cases an hourly worker is exempt. This article sets the two side by side, shows which tests apply to which exemption, runs seven jobs through them, and prices what a wrong classification can cost. The three tests are explained in full in do salaried employees get overtime?

Exempt vs. non-exempt, side by side

What changes under the FLSA
Topic	Exempt employee	Non-exempt employee
Overtime	No FLSA overtime for hours over 40.	At least 1.5 times the regular rate for hours over 40 in a workweek.
Minimum wage	The FLSA exemption covers minimum wage as well as overtime.	Covered by the federal minimum wage.
How pay is set	Usually a salary of at least $684 a week. Some exemptions have no salary test, and computer employees can be paid hourly at $27.63 or more.	Hourly, salary, piece rate, commission or another basis. Overtime is worked out on the average hourly rate from those earnings.
Hours records	The FLSA hours-and-wages record list in Fact Sheet #21 is written for non-exempt workers.	The employer must keep hours worked each day and week, the regular rate, overtime earnings and other listed records.
Weeks with partial work	Full salary for any week in which any work is performed, apart from the listed deductions.	Paid for the hours worked.
What decides it	Salary basis, salary level and duties, as the exemption requires. The title does not decide it.	Everything that does not meet an exemption.

Which tests apply to which exemption

Salary tests and duties tests by exemption
Exemption	Salary basis and level	Source
Executive	Yes: at least $684 a week on a salary basis, plus the duties test.	Fact Sheet #17A
Administrative	Yes: salary or fee basis of at least $684 a week, plus the duties test.	Fact Sheet #17A
Learned and creative professional	Yes: salary or fee basis of at least $684 a week, plus the duties test.	Fact Sheet #17A
Computer employee	Salary or fee basis of at least $684 a week, or an hourly rate of at least $27.63, plus the duties test.	Fact Sheet #17A
Outside sales	No salary test is listed: the duties test (sales made, customarily and regularly away from the employer’s places of business) decides it.	Fact Sheet #17A
Highly compensated employee	Total annual compensation of $107,432 or more, including at least $684 a week on a salary or fee basis, plus performing at least one exempt duty.	Fact Sheet #17A
Teachers	The salary basis and salary level requirements do not apply to the teaching professionals described in the regulation.	29 CFR 541.303(d)
Lawyers and doctors	The salary requirements of 541.300 and subpart G do not apply to the employees covered by this section.	29 CFR 541.304(d)

The annual level behind the weekly figure is $684 × 52 = $35,568. That is the figure in the Department of Labor’s Fact Sheet #17A as of 3 November 2026. A 2024 rule that would have raised it was vacated by a federal court on 15 November 2024, and some states set a higher level, so confirm the current figure and your state’s before relying on it.

Seven jobs, run through the tests

Illustrations only: the real answer depends on the actual duties
The job	Likely result	Why
Office coordinator paid a $600 weekly salary	Non-exempt	Under the $684 level, so the executive, administrative and professional exemptions cannot apply.
Department manager on a $900 weekly salary who directs two full-time employees and whose hiring and firing recommendations carry particular weight	Can be exempt	Meets the salary level and the executive duties test, if managing is the primary duty.
“Supervisor” on a $900 weekly salary doing mostly manual production work	Non-exempt	The white-collar exemptions do not apply to blue-collar workers, and the title does not decide it.
Software engineer paid $30.00 an hour doing the listed computer duties	Can be exempt	Hourly pay of at least $27.63 satisfies the computer employee test.
The same engineer paid $26.00 an hour	Non-exempt	Below the $27.63 hourly rate, and not on a weekly salary of $684 or more.
Sales representative who is customarily and regularly away from the office making sales	Can be exempt	The outside sales test is a duties test with no salary level listed.
Paramedic earning $110,000 a year	Non-exempt	The exemptions do not apply to first responders, whatever the rank or pay.

What a wrong classification can cost

If an employer treats a non-exempt employee as exempt, the unpaid overtime is owed. Under 29 U.S.C. 216(b) the employer is liable for the unpaid overtime and an additional equal amount as liquidated damages, plus a reasonable attorney’s fee and costs. Under 29 U.S.C. 255(a) an action may be brought within two years after the cause of action accrued, or three years for a willful violation.

As an illustration, take an employee paid $1,000 a week who works 50 hours every week and is wrongly classed as exempt. The overtime owed depends on what the salary was agreed to cover:

$1,000 a week, 50 hours every week, before attorney’s fees
Method	Owed a week	2 years, with equal damages	3 years, with equal damages
Salary agreed to cover 40 hours	$375.00	$78,000	$117,000
Fluctuating workweek (all conditions met)	$100.00	$20,800	$31,200

The first row is $39,000 of unpaid overtime over 104 weeks, doubled to $78,000. The second applies only if every condition of the fluctuating workweek method was met and the extra half-time pay was paid, which is rarely true for an employee who was treated as exempt. These are not predictions. They show why the classification and the method matter. The fluctuating workweek calculator and the overtime calculator work out your own week.

For employers: how to classify a job

Start with the duties, not the title. Write down what the person actually does most of the time.
Pick the one exemption that fits, and read its duties test in Fact Sheet #17A.
Check whether that exemption has a salary test. Most do: at least $684 a week on a salary basis.
Check the pay practice. Deductions for employer-caused absences mean the pay is not on a salary basis (29 CFR 541.602).
If any step fails, classify the job as non-exempt, record hours worked each workweek and pay overtime for hours over 40.
Check your state, which can set a higher salary level or add daily overtime.

For employees: how to check your own job

Find your weekly pay and compare it with $684, unless your job is one of the exemptions with no salary test.
Compare what you do most of the time with the duties test for the exemption you were given.
Note whether pay is ever docked for days when work was not available.
Keep a record of your start and finish times each day.
Ask your employer in writing how the job is classified, or contact the Department of Labor Wage and Hour Division or your state labor department.

Common mistakes

MythSalaried means exempt and hourly means non-exempt.

FactSalary is only one test. A salaried employee can be non-exempt, and some hourly computer employees are exempt.

MythAn employee can agree to be exempt.

FactFact Sheet #23 says overtime pay cannot be waived by agreement between the employer and employees.

MythEvery exemption has the same salary test.

FactOutside sales, teachers, lawyers and doctors have no salary level test, and computer employees can qualify on an hourly rate.

MythA manager title is enough.

FactThe duties decide it: managing as the primary duty and directing two or more other full-time employees, among other tests.

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Frequently asked questions

What is a non-exempt employee?

A non-exempt employee is covered by the FLSA minimum wage and overtime rules because the job does not meet an exemption. The employer must pay at least the federal minimum wage and at least 1.5 times the regular rate for hours over 40 in a workweek, and must keep hours records.

What is an exempt employee?

An exempt employee holds a job that passes the Department of Labor tests for an exemption, such as the executive, administrative, professional, computer or outside sales exemption. The FLSA minimum wage and overtime rules do not apply to that job. Most of these tests include a salary of at least $684 a week and a duties test.

Are salaried employees exempt?

Not automatically. A salary is only one test. The pay must reach the salary level and the duties must fit the exemption. A salaried employee who fails either is non-exempt and is owed overtime for hours over 40.

Can an hourly employee be exempt?

Yes, in one case in the Department of Labor fact sheet: a computer employee paid at least $27.63 an hour who performs the listed duties. Other white-collar exemptions need a salary or fee basis.

Does job title decide whether someone is exempt?

No. The Department of Labor says titles do not decide it. The salary basis, the salary level and the actual duties do. A manager title on a job that is mostly manual work does not make the job exempt.

Can an employee agree to be exempt?

No. Fact Sheet #23 says the overtime requirement cannot be waived by agreement between the employer and employees.

What happens if an employer classifies an employee wrongly?

The unpaid overtime is owed, plus an equal amount as liquidated damages and a reasonable attorney’s fee and costs under 29 U.S.C. 216(b). The action may be brought within two years, or three years for a willful violation. For $1,000 a week and 50 hours every week, the salary-covers-40-hours method gives $375 a week, which is $78,000 over 104 weeks once doubled.

What records must an employer keep for non-exempt employees?

Fact Sheet #21 lists hours worked each day and each workweek, the regular rate, overtime earnings and other wage records for each non-exempt worker. No particular form is required. Payroll records are kept for three years and time cards for two.

Official sources

The regulations and fact sheets below were opened and read on 03 Nov 2026. The rules are taken from the Department of Labor fact sheets, the regulations and the statutes listed here. The pay figures are our own arithmetic from the same engine as the overtime and fluctuating workweek calculators. State rules, which can set a higher salary level, are not covered. The next check is due by 03 May 2027, or sooner if a rule changes.

This article is general information, not legal, tax or payroll advice. Whether a job is exempt depends on its actual duties, the pay and your state, so confirm with the Department of Labor, your state labor department or an adviser. See the disclaimer. Found a mistake? Tell us.