FLSA Exempt Salary Requirements: Threshold, Basis, and Duties

To be exempt from overtime under the Fair Labor Standards Act, a white-collar employee generally must earn at least $684 per week — $35,568 a year — paid on a true salary basis, and must perform duties that fit one of the recognized exemption categories. That is the FLSA exempt salary requirement in force right now. A 2024 Department of Labor rule that would have raised the floor to $844 per week and then $1,128 per week was vacated nationwide by the U.S. District Court for the Eastern District of Texas on November 15, 2024, so the 2019 threshold remains what employers have to meet.¹

The Current Salary Threshold

The DOL has confirmed it is enforcing the 2019 rule’s salary level of $684 per week.¹ Annualized, that comes to $35,568. The figure is measured gross, before taxes or voluntary deductions, and the value of employer-provided housing, meals, or other facilities cannot be counted toward it.²

The vacated 2024 rule also included automatic three-year updates beginning in 2027. Those never took effect either. Any future change would require new rulemaking, so employers should watch for proposed rules but should not budget around numbers that were never finalized.

Counting Bonuses and Commissions Toward the Threshold

Up to 10 percent of the standard salary threshold can be satisfied with nondiscretionary bonuses, incentive payments, and commissions.³ At $684 per week, that means up to $68.40 per week can come from variable pay rather than guaranteed salary.⁴

The bonus payments have to be made at least annually. If compensation falls short at the end of a 52-week period, the employer can make a single catch-up payment within one pay period after the period ends to close the gap. That payment counts only toward the year it covers, not the following year.³ Discretionary bonuses, the kind an employer hands out without any prior promise or formula, do not count.

What “Salary Basis” Actually Means

Clearing the dollar threshold is only half the requirement. The employee also has to be paid on a genuine salary basis: a fixed, predetermined amount each pay period that does not vary based on how much or how well they worked. An exempt employee who performs any work in a given week is entitled to the full weekly salary for that week, whether they worked two days or five.⁵

The reverse is also true. If the exempt employee performs zero work in a week, no salary is owed for that week. The test is whether pay is truly guaranteed for any week containing work, not whether the employee clocked a specific number of hours.

Administrative and professional employees can instead be paid on a fee basis, meaning an agreed sum for a single job regardless of how long it takes. To qualify, the fee must work out to at least $684 for a standard 40-hour week.⁶

When You Can and Can’t Dock an Exempt Employee’s Pay

The salary basis test limits when an employer can reduce an exempt worker’s paycheck. Improper deductions can destroy the exemption, not only for the affected employee but for everyone in the same job classification under the same managers. These deductions are allowed:⁵

Full-day absences for personal reasons unrelated to illness. A day-and-a-half absence justifies deducting only for the one full day.
Full-day absences for sickness or disability, when the employer has a bona fide leave plan that provides replacement compensation.
Any hours taken as unpaid FMLA leave, including partial days. Four hours of unpaid FMLA leave in a 40-hour week supports a 10 percent salary reduction for that week.⁷
Unpaid disciplinary suspensions of one or more full days for violating workplace conduct rules, imposed in good faith.
Pay penalties for violations of safety rules of major significance.
Offsets against jury fees, witness fees, or military pay received during a week of jury duty or military leave. The salary itself cannot be cut for those absences.
Proportionate pay based on actual days worked during the first or last week of employment.

Partial-day deductions for personal absences or illness are where employers stumble most. Outside the FMLA exception, docking an exempt employee for leaving two hours early on a Tuesday violates the salary basis test.

Safe Harbor for Improper Deductions

An improper deduction does not automatically kill the exemption. The regulations provide two layers of protection.⁸

Isolated or inadvertent improper deductions can be fixed by reimbursing the employee, as long as they were not part of a pattern. The full safe harbor applies when the employer has a clearly communicated written policy prohibiting improper deductions and offering a complaint mechanism. When a complaint comes in, the employer must reimburse the employee and commit in good faith to future compliance. The safe harbor holds unless the employer willfully continues making improper deductions after complaints. Distributing the policy at hire or publishing it in the handbook is the practical answer; there is no requirement that employees sign an acknowledgment, but the employer must be able to show the policy was actually communicated.

Jobs With No Salary Requirement

Several categories of workers are exempt from overtime regardless of what they earn or how their pay is structured. They bypass both the salary level and salary basis tests.

Licensed lawyers and physicians actively practicing their profession do not need to meet any salary threshold.² The same is true for medical residents and interns in a hospital residency program. The exemption comes from the professional nature of the work, not compensation.

Teachers at elementary and secondary schools, along with professors and instructors at colleges and universities, are exempt as long as their primary duty is teaching. They can be paid hourly, receive a stipend below the salary floor, or be compensated in any other manner without losing exempt status.²

Outside sales employees also have no salary requirement. The exemption applies when the primary duty is making sales or obtaining contracts, and that work is regularly performed away from the employer’s place of business.⁹ Inside sales representatives working from the office do not qualify, even on commission.

The Computer Employee Hourly Alternative

Computer professionals have a second path. They can qualify either by meeting the standard salary threshold on a salary or fee basis, or by earning at least $27.63 per hour.¹⁰ The hourly rate is set by statute rather than regulation, so it was not touched by the vacated 2024 rule and has been unchanged for years.¹¹

The duties limit this exemption to workers whose primary duty is systems analysis, software design and development, programming related to machine operating systems, or a combination of those tasks at the same skill level. Help desk technicians, hardware repair staff, and employees who simply use software do not qualify.

Highly Compensated Employees

Workers earning at least $107,432 in total annual compensation face a lighter duties analysis.¹² Instead of meeting every element of the executive, administrative, or professional duties test, they need only regularly perform at least one exempt duty from any of those categories.¹³ An employee who regularly directs the work of two other people could qualify as a highly compensated executive without meeting the full executive duties test.

The $107,432 figure is the level currently in effect after the 2024 rule’s increase to $151,164 was vacated.¹² Total annual compensation counts base salary plus nondiscretionary bonuses and commissions, but the employee still has to receive at least $684 per week on a salary or fee basis. If total compensation falls short at the end of the 52-week period, the employer has one month after the period ends to make a single catch-up payment.¹³

State Thresholds May Be Higher

The federal number is a floor. Several states set their own minimum salary levels for overtime exemptions, and when state law is more generous to employees, the employer must follow the higher standard. Some state thresholds sit well above $684 per week, with the highest exceeding $1,200 per week, and many update annually. Clearing the federal bar does not settle the question if the employee works in a state with a higher one.

The Duties Test Still Decides Most Disputes

Salary is a gatekeeper. The duties test is where most classification fights get resolved. An employee earning above the salary threshold is still nonexempt if their day-to-day work does not fit a recognized exemption category — executive, administrative, professional, computer, or outside sales. Job titles do not matter. A “manager” who spends 90 percent of the day stocking shelves and ringing up customers is not performing executive duties, whatever the business card says. The DOL and the courts look at what the employee actually does during the workweek.¹⁴

What Misclassification Costs

Getting this wrong is expensive. An employee improperly treated as exempt can recover unpaid overtime for up to two years, and three years if the violation was willful.¹⁵ On top of back wages, the employee is entitled to an equal amount in liquidated damages, effectively doubling the liability, unless the employer can prove the violation was made in good faith with reasonable grounds for believing it was lawful.¹⁶

The DOL can also impose civil money penalties of up to $2,515 per violation for repeated or willful failures to pay minimum wage or overtime.¹⁷ The penalties are per employee, per violation, so a company that misclassifies an entire department can face a bill that compounds fast. The math is straightforward: take every misclassified worker, calculate every overtime hour worked over the lookback period, multiply by 1.5 times the regular rate, then double for liquidated damages.

1
U.S. Department of Labor. Overtime Pay
2
eCFR. 29 CFR 541.600 – Amount of Salary Required
3
U.S. Department of Labor. Fact Sheet 17G – Salary Basis Requirement and the Part 541 Exemption Under the Fair Labor Standards Act
4
U.S. Department of Labor. Fact Sheet 17U – Nondiscretionary Bonuses and Incentive Payments and Part 541 Exempt Employees
5
eCFR. 29 CFR 541.602 – Salary Basis
6
eCFR. 29 CFR 541.605 – Fee Basis
7
eCFR. 29 CFR 825.206 – Interaction With the FLSA
8
eCFR. 29 CFR 541.603 – Effect of Improper Deductions From Salary
9
U.S. Department of Labor. Fact Sheet 17F – Exemption for Outside Sales Employees Under the Fair Labor Standards Act
10
eCFR. 29 CFR 541.400 – General Rule for Computer Employees
11
Office of the Law Revision Counsel. 29 USC 213 – Exemptions
12
U.S. Department of Labor. Fact Sheet 17H – Highly-Compensated Employees and the Part 541 Exemption Under the Fair Labor Standards Act
13
eCFR. 29 CFR 541.601 – Highly Compensated Employees
14
U.S. Department of Labor. Fact Sheet 17B – Exemption for Executive Employees Under the Fair Labor Standards Act
15
Office of the Law Revision Counsel. 29 USC 255 – Statute of Limitations
16
Office of the Law Revision Counsel. 29 USC 260 – Liquidated Damages
17
U.S. Department of Labor. Civil Money Penalty Inflation Adjustments