An hourly employee can be FLSA exempt, but only through a narrow door. The Fair Labor Standards Act generally requires exempt employees to be paid a fixed salary of at least $684 per week, and hourly pay by its nature isn’t fixed. The one clear exception is the computer employee exemption, which permits exempt status at a guaranteed hourly rate of at least $27.63. Outside that specific carve-out and a rarely-used outside sales route, an hourly worker cannot be exempt from overtime under federal law.
Why Hourly Pay and Exempt Status Usually Don’t Mix
The FLSA divides workers into two categories. Non-exempt employees are entitled to at least the federal minimum wage for every hour worked and time-and-a-half for anything over 40 hours in a workweek.1U.S. Department of Labor. Wages and the Fair Labor Standards Act Exempt employees are carved out of both requirements entirely.2U.S. Department of Labor. Fact Sheet 17A: Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees Under the FLSA Their employer owes no overtime no matter how many hours they put in.
To be exempt under the standard white-collar categories — executive, administrative, or professional — a worker has to satisfy every prong of a multi-part test covering how much they earn, how they’re paid, and what they actually do. The pay prong is where hourly workers get stopped. It’s called the salary basis test, and it requires the employee to receive a predetermined, fixed amount each pay period that doesn’t shrink when they work fewer hours or produce less output.3eCFR. 29 CFR Part 541 Subpart G – Salary Requirements In any week the employee performs any work at all, the full salary must be paid regardless of how many days or hours were worked.
That fixed salary has to be at least $684 per week, or $35,568 per year.4U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemption From Minimum Wage and Overtime Protections Under the FLSA The Department of Labor finalized a rule in 2024 raising this figure to $1,128 per week, but a federal court in Texas vacated that rule nationwide in November 2024. The DOL is enforcing the pre-2024 $684 threshold for the foreseeable future.
The conflict with hourly pay is structural. If compensation rises and falls with the number of hours clocked, it isn’t a predetermined fixed amount. An employer cannot simply pay someone by the hour, label them exempt, and skip overtime. The pay structure itself defeats the salary basis requirement before the duties test even comes into play.
The Computer Employee Exemption: The One Real Hourly Path
Section 13(a)(17) of the FLSA is the only exemption that expressly allows an hourly rate as an alternative to salary. The rate has to be at least $27.63 per hour.5Office of the Law Revision Counsel. 29 USC 213 – Exemptions That figure was written into the statute in 1996 and has never been adjusted for inflation, so as pay floors go it’s low. A computer employee can also qualify on a salary or fee basis at the standard $684 weekly threshold, but the hourly option is what makes this exemption distinctive.
Meeting the pay requirement is only half of it. The employee’s primary duty must involve one or more of the following:6U.S. Department of Labor. Fact Sheet 17E: Exemption for Employees in Computer-Related Occupations Under the FLSA
- Systems analysis — applying analysis techniques and consulting with users to determine hardware, software, or system specifications.
- Software design and development — creating, testing, documenting, or modifying computer systems or programs based on design specifications.
- Operating system work — designing, testing, or modifying programs related to machine operating systems.
- A combination of those duties requiring the same level of skill.
This is where employers most often get it wrong. The exemption covers systems analysts, programmers, and software engineers doing substantive design and development work. It does not cover employees who repair computer hardware, run help desks, or simply use software as a tool in some other job. A CAD drafter working in complex software all day still isn’t a “computer employee” under this test. The exemption reaches people who build or architect the systems, not people who use them.6U.S. Department of Labor. Fact Sheet 17E: Exemption for Employees in Computer-Related Occupations Under the FLSA
Some states set their own computer professional exemption rates well above the federal $27.63 figure, with hourly floors ranging from roughly $35 to $60 per hour in the jurisdictions that have adopted them. If your state has a higher rate, that’s the one the employer has to meet.
The Outside Sales Exception
The outside sales exemption imposes no salary requirement at all. No minimum weekly pay, no salary basis test, no fee basis test.7U.S. Department of Labor. Fact Sheet 17F: Exemption for Outside Sales Employees Under the FLSA The employee’s primary duty must be making sales or obtaining contracts for services, and the employee must regularly work away from the employer’s place of business. In theory an hourly outside salesperson could be exempt. In practice, outside sales roles almost always use commission or salary structures rather than hourly pay, so this exemption rarely produces the hourly-and-exempt combination.
Fee Basis Is Not Hourly Pay
Administrative, professional, and computer employees can be paid on a “fee basis” instead of a traditional salary, and this comes up often enough that it’s worth separating from hourly pay. A fee is an agreed-upon sum for completing a single, unique job, regardless of how long it takes.8eCFR. 29 CFR Part 541 – Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Computer and Outside Sales Employees – Section 541.605 To test whether a fee meets the salary requirement, you divide the fee by the hours worked and check whether that rate would produce at least $684 over a 40-hour week. A graphic designer paid $500 for a project that took 25 hours works out to $800 for 40 hours, which clears the bar.
Payments calculated by the number of hours or days worked don’t count as fees. A per-hour rate is hourly pay, not fee-basis pay, and it doesn’t unlock any exemption on its own. The fee-basis rule is worth knowing about because it explains how some project-paid workers end up exempt, but it isn’t a workaround for hourly compensation.
If You’re Hourly and Being Treated as Exempt
If your employer pays you by the hour and calls you exempt, and you don’t fit the computer employee criteria or the outside sales role, something is likely wrong with the classification. The financial stakes for the employer are significant, which is also what makes recovery worthwhile for the worker.
An employer that violates the FLSA’s minimum wage or overtime rules owes the affected employees all unpaid wages plus an equal amount in liquidated damages.9Office of the Law Revision Counsel. 29 USC 216 – Penalties That doubling is the default. Courts award it unless the employer can prove the violation was made in good faith with reasonable grounds to believe it was lawful, which is a hard argument to win on a straight misclassification. The employer also pays the employee’s attorney’s fees and court costs.
The standard look-back period is two years. If the violation was willful — meaning the employer knew or showed reckless disregard for whether its practices violated the law — that window extends to three years. For repeated or willful violations, the DOL can also impose civil penalties of up to $2,515 per violation.10eCFR. 29 CFR Part 579 – Civil Money Penalties
You can file a complaint with the Department of Labor’s Wage and Hour Division online or by calling 1-866-487-9243. The nearest field office will contact you within two business days to assess whether an investigation is warranted.11Worker.gov. Filing a Complaint With the U.S. Department of Labor Wage and Hour Division You can also bring a private lawsuit under 29 U.S.C. § 216(b) on your own behalf and on behalf of similarly situated coworkers.9Office of the Law Revision Counsel. 29 USC 216 – Penalties Either route runs on the clock: waiting past the two- or three-year limit means losing the oldest unpaid wages even if the misclassification is obvious.
State Law Can Change the Answer
Federal law sets the floor, not the ceiling. Several states impose their own salary thresholds for overtime exemption that exceed the federal $684 per week, with some requiring annual salaries above $80,000 for certain white-collar exemptions. When state and federal standards conflict, the employer has to follow whichever one is more favorable to the employee. Before concluding you are or aren’t exempt, check your state labor department’s rules. The federal answer described here may not be the one that governs your paycheck.