Does non-exempt mean salaried?

The classification of an employee under federal wage and hour laws often causes confusion, particularly when the terms "salaried" and "non-exempt" appear together. Simply hearing that someone receives a fixed salary might lead one to assume they are exempt from overtime rules, but this is frequently not the case. The reality is that the method of payment—salary versus hourly—is separate from the employee's legal entitlement to overtime compensation. ^[1][7] In short, no, non-exempt does not automatically mean hourly; an employee can absolutely be paid a salary and still retain their non-exempt status. ^[3][4] This dual status, known as salaried non-exempt, is a common configuration governed by the Fair Labor Standards Act (FLSA). ^[6]

# Status Definitions

To properly address the salaried non-exempt question, we must first establish what the two primary terms—exempt and non-exempt—actually signify under federal law. ^[2] These designations are not about job title or seniority; they strictly determine eligibility for overtime pay. ^[2][5]

An exempt employee is one who is exempt from the FLSA's minimum wage and overtime requirements. ^[2] If you are correctly classified as exempt, your employer is not legally required to pay you time-and-a-half for hours worked beyond 40 in a single workweek. ^[5]

Conversely, a non-exempt employee is entitled to overtime pay. ^[5][6] This means that for every hour worked over 40 in a standard workweek, the employee must receive compensation at a rate of one and one-half times their regular rate of pay. ^[2][6] This mandatory overtime requirement is the defining characteristic of non-exempt status. ^[5]

# Salary Versus Pay Method

Understanding the "salaried" aspect requires looking at the method of payment. Being salaried means the employee receives a predetermined, fixed amount of money on a regular schedule (e.g., weekly, bi-weekly) regardless of the exact number of hours worked in that pay period. ^[7] This is in contrast to an hourly employee, whose pay fluctuates directly based on the specific hours logged each day. ^[7]

However, payment method does not equate to legal status. An employee paid a salary can still be non-exempt. ^[1][3] The critical factor is not how they are paid, but what legal protections apply to their hours worked. ^[1] If the FLSA mandates overtime eligibility, the employee is non-exempt, even if their paycheck remains the same amount every time. ^[6]

Why would someone be salaried non-exempt?

# The Exemption Tests

For an employee to be classified as exempt from overtime protections, they must satisfy three specific requirements simultaneously: the salary basis test, the salary level test, and the duties test. ^[6] If an employee fails even one of these tests, they must be classified as non-exempt, regardless of their pay arrangement. ^[5][2]

# Salary Basis Requirement

The salary basis test requires that the employee receive a predetermined, fixed salary that is not subject to reduction based on the quality or quantity of work performed. ^[6] For instance, an employer generally cannot dock the pay of a salaried employee for taking an unplanned half-day off if they have already worked part of the week. ^[6]

# Salary Level Threshold

The FLSA establishes a minimum weekly salary threshold that an employee must meet to even be considered for exemption. ^[2] As of current federal guidelines, this threshold is set at \684 per week (equivalent to \35,568 annually). ^[6] If an employee’s salary falls below this level, they are non-exempt, even if their duties are executive or professional in nature. ^[2] State laws often set higher thresholds, meaning a state’s minimum requirement must be met in addition to the federal minimum. ^[5]

# Duties Requirement

Even if an employee meets both the salary basis and the salary level tests, they must also perform specific job duties that fall under one of the recognized exemption categories: executive, administrative, or professional roles. ^[2][6] These duties tests are often detailed and fact-specific. For example, administrative exemption typically requires the employee’s primary duty to involve the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers, including the exercise of discretion and independent judgment with respect to matters of significance. ^[2]

# Salaried Non-Exempt Reality

When an employee is paid a salary but is designated as non-exempt, it means they meet the salary basis (they get a fixed paycheck) but fail either the salary level or the duties test (or both). ^[1][3]

Consider this typical scenario: A manager receives \800 per week (\41,600 annually). This salary is above the federal $684 minimum, satisfying the salary level test. However, if their primary job duty is supervising routine manual production tasks rather than performing high-level administrative work, they fail the duties test. ^[2] In this case, they are salaried non-exempt. If they work 50 hours in a week, they must receive overtime for those 10 extra hours, despite receiving a fixed salary. ^[1]

Tracking pay for a salaried non-exempt worker involves a slightly different mathematical process than for an hourly worker when overtime is due. For an hourly worker, the regular rate is straightforward: \20/hour means overtime is \30/hour. For the salaried non-exempt employee, the calculation requires determining the regular rate of pay for that specific workweek. ^[6]

Here is how that determination is commonly made: Take the total salary earned for the week and divide it by the total number of hours actually worked in that week. ^[6]

Suppose an employee earns a fixed weekly salary of $1,000 and works 50 hours.

1. Calculate the Regular Rate: \1,000 / 50 hours = \20.00 per hour. ^[6]
2. Calculate Overtime Rate: \20.00 x 1.5 = \30.00 per hour. ^[6]
3. Calculate Total Pay:
   • Regular pay for 40 hours: 40 hours * $20.00 = $800.00
   • Overtime pay for 10 hours: 10 hours * $30.00 = $300.00
   • Total weekly compensation: $800.00 + $300.00 = $1,100.00. ^[6]

Even though the employee agreed to work for \1,000, the law mandates the extra \100 because they worked over 40 hours and their status is non-exempt. ^[6] This calculation often requires careful record-keeping by the employer to ensure compliance. ^[1]

Is a salaried person exempt?

# Hourly Versus Salary Tracking

While an hourly employee’s status is almost always non-exempt (unless they are a rare exception like certain commissioned salespeople who qualify for a specific exemption), their pay calculation is simpler: their stated hourly rate is their regular rate, and they receive 1.5 times that rate for excess hours. ^[7] The complexity arises when the salary is fixed, but the hours fluctuate. If a salaried non-exempt employee works fewer than 40 hours in a week, they are still typically due their full salary amount, as the salary basis rule generally protects against pay reduction for minor shortfalls in hours. ^[6] The overtime penalty only kicks in above the 40-hour mark. ^[6]

It is worth noting that the FLSA defines the "workweek" as a fixed and regularly recurring period of 168 hours—seven consecutive 24-hour periods—and overtime must be calculated on a workweek basis, not an average across multiple weeks. ^[2] This "no averaging" rule is strict; working 50 hours one week and 30 the next still results in overtime liability for the 50-hour week. ^[2]

# Compliance Nuances

When dealing with non-exempt classifications, especially salaried ones, attention to detail is paramount for employers to avoid potential wage and hour lawsuits. A common pitfall involves misapplying management duties. Job titles like "Supervisor" or "Team Lead" do not automatically confer exempt status; the actual tasks performed must align with the rigorous FLSA requirements. ^[2] If a salaried employee spends the majority of their time performing the same production or clerical tasks as the non-exempt staff they oversee, they should be classified as non-exempt and tracked for overtime. ^[2]

Another point of variation is geography. While the FLSA sets the federal baseline, many states have enacted their own wage and hour laws that provide greater protection to employees. ^[5] For example, some states may have a higher minimum salary threshold for exemption than the federal standard, or they may require overtime pay after only 8 hours in a single day, not just 40 hours in a week. ^[5] In these situations, the standard of most favorable to the employee must be applied. ^[5] If a state requires daily overtime, even a salaried employee must be tracked and paid accordingly for those daily overages, even if they do not exceed 40 hours for the entire week.

How is a salary package different from a salary?

# Actionable Employee Perspective

For an individual employee classified as salaried non-exempt, the primary takeaway is the absolute necessity of accurate timekeeping. ^[3] Even if you are salaried, you must record every hour you work. ^[3] Do not assume that because you receive a fixed paycheck, the clock stops mattering. Accurate records protect you if a dispute arises over unpaid overtime, as the burden of proof often shifts to the employer if they failed to keep adequate records. ^[3] If you are salaried non-exempt and regularly work over 40 hours, it is advisable to check your pay stub after a heavy week to ensure the calculation has been performed correctly, especially if you see no difference in pay between a 40-hour week and a 50-hour week. If you suspect you are being misclassified—for example, you believe you meet the duties test for administrative work but are being paid hourly, or you are salaried but never see overtime pay for 50-hour weeks—consulting documentation from agencies like the Department of Labor can clarify your rights regarding minimum wage and overtime eligibility. ^[6] Understanding the three tests (salary basis, level, and duties) is the best defense against incorrect placement into the wrong category. ^[2]