The difference between salaried and hourly overtime rules comes down to this: hourly employees almost always earn overtime at 1.5 times their regular rate after 40 hours in a workweek, while salaried employees only lose that right if they meet every part of a strict exemption test. Being paid a salary does not, by itself, cancel your overtime rights. Plenty of salaried workers are legally entitled to overtime, and misclassification is one of the most common wage violations in the country.
How Hourly and Salaried Pay Differ
Hourly employees earn a set dollar amount for each hour worked. The federal floor is $7.25 per hour, and paychecks rise or fall with the hours actually put in. Salaried employees receive a fixed annual amount split into equal installments, so a week of 35 hours and a week of 50 hours produce the same paycheck.
The FLSA does not set pay frequency; that is a matter of state law. And the FLSA does not treat “salaried” as a synonym for “no overtime.” A salaried worker can be non-exempt, in which case overtime is owed just as it would be for an hourly worker. What actually determines overtime eligibility is classification: exempt or non-exempt.
The Overtime Rule
Non-exempt employees must be paid at least 1.5 times their regular hourly rate for every hour worked beyond 40 in a single workweek.1U.S. Department of Labor. Overtime Pay Someone earning $20 an hour gets $30 for each overtime hour. There is no federal cap on how many overtime hours an employer can require; the rule only sets the price.
A workweek is a fixed, recurring 168-hour period. It can start on any day and hour the employer picks, but once set it cannot be shifted around to dodge the 40-hour trigger.2U.S. Department of Labor. Fact Sheet #23: Overtime Pay Requirements of the FLSA Overtime is calculated one workweek at a time. Employers cannot average two weeks together to hide the hours.
Federal law only triggers overtime at 40 hours per week. A few states, including California and Alaska, also require overtime after eight hours in a single day, so long shifts can produce overtime even in a sub-40-hour week depending on where you work.
If you work two different jobs for the same employer at different hourly rates in the same week, overtime is based on a weighted average of your total earnings divided by total hours, not the lower rate.3eCFR. 29 CFR 778.115 – Employees Working at Two or More Rates
One boundary worth naming: private-sector employers cannot substitute “comp time” (paid time off in place of overtime cash) for non-exempt workers. That option exists only for state and local government employers.4eCFR. 29 CFR Part 553 – Application of the Fair Labor Standards Act to Employees of State and Local Governments A private-sector comp time deal violates federal law even if you agreed to it.
When a Salaried Worker Is Actually Exempt
To be exempt from overtime under one of the white-collar exemptions, a salaried employee must pass three separate tests. Failing any one of them makes the employee non-exempt.5U.S. Department of Labor. Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees Under the Fair Labor Standards Act
Salary Level
You must earn at least $684 per week, or $35,568 annually.6U.S. Department of Labor. Overtime Final Rule and Salary Levels Anyone earning less than that is automatically non-exempt and entitled to overtime, no matter what their job duties look like. Employers can use nondiscretionary bonuses and commissions to cover up to 10 percent of the threshold, but the guaranteed salary portion must still hit at least $615.60 per week each pay period.7U.S. Department of Labor. Fact Sheet 17U: Nondiscretionary Bonuses and Incentive Payments (Including Commissions) and Part 541 Exempt Employees
Salary Basis
You must receive a guaranteed minimum amount each week you perform any work, regardless of hours or output quality. Your employer cannot dock your pay because business was slow or because you left two hours early. Partial-day deductions are almost always improper and can destroy the exemption for the whole pay period.8eCFR. 29 CFR 541.602 – Salary Basis
The regulations do allow a narrow set of permissible deductions:
- Full-day personal absences unrelated to sickness.
- Full-day absences for illness or disability, if the employer maintains a bona fide leave plan.
- Offsets against jury fees, witness fees, or military pay (but not deductions from salary itself for those absences).
- Good-faith penalties for violating safety rules of major significance.
- Full-day disciplinary suspensions for infractions of written workplace conduct rules that apply to all employees.
- Proportionate pay for weeks in which the employee takes unpaid FMLA leave.
An employer with a pattern of improper deductions can lose the exemption for every employee in the same job classification at that location, not just the worker whose pay was docked.
Duties
The duties test is where most misclassification disputes live, because job titles carry no weight. What matters is what you actually do most of the time.
The executive exemption requires that your primary duty is managing the business or a recognized department, that you regularly direct the work of at least two full-time employees, and that you have real authority over hiring and firing (or that your recommendations on those decisions carry meaningful weight).
The administrative exemption applies when your primary duty is office or non-manual work tied directly to management or general business operations, and you exercise discretion and independent judgment on matters of significance.9U.S. Department of Labor. Fact Sheet #17C: Exemption for Administrative Employees Under the Fair Labor Standards Act Following well-established procedures from a manual does not count, even when the work is technically demanding.
The learned professional exemption covers work requiring advanced knowledge in a field such as law, medicine, engineering, accounting, or the sciences, where the knowledge is typically acquired through prolonged specialized academic instruction.10eCFR. 29 CFR 541.301 – Learned Professionals Occupations learned mainly through apprenticeship or on-the-job training do not qualify.
The computer employee exemption covers systems analysts, programmers, and software engineers whose work involves system analysis, design, development, or testing. They can be paid either on salary at $684 per week or hourly at a minimum of $27.63.11U.S. Department of Labor. Fact Sheet 17E: Exemption for Employees in Computer-Related Occupations Under the Fair Labor Standards Act Hardware installation and repair work does not qualify.
The outside sales exemption applies to employees whose primary duty is making sales or obtaining contracts and who regularly work away from the employer’s place of business.12eCFR. 29 CFR Part 541 Subpart F – Outside Sales Employees Phone and internet sales do not count unless they merely supplement in-person selling. This exemption has no minimum salary requirement.
Workers earning at least $107,432 a year in total compensation, including at least $684 per week on a salary basis, face a lighter highly compensated employee duties test. They need only regularly perform one exempt duty of an executive, administrative, or professional worker. But this shortcut applies only to office and non-manual work; production employees, construction workers, mechanics, and similar hands-on roles cannot be exempt under this provision no matter what they earn.13eCFR. 29 CFR 541.601 – Highly Compensated Employees
What Counts as Hours Worked
For non-exempt employees, overtime turns on how many hours actually count as work. Several categories catch people off guard.
Travel. Your regular commute is not paid. But travel between job sites during the workday is compensable. A special one-day out-of-town assignment is also work time, minus what your normal commute would have been.14U.S. Department of Labor. Fact Sheet #22: Hours Worked Under the Fair Labor Standards Act (FLSA)
Training and meetings. These are paid time unless all four of the following are true: they happen outside normal hours, attendance is genuinely voluntary, the content is not directly related to your job, and no work is performed during the session. Fail any one condition and the time counts.
On-call and waiting time. The DOL distinguishes between being “engaged to wait” (paid) and “waiting to be engaged” (usually not paid). A firefighter playing cards between calls is engaged to wait. A plumber at home who might be paged is generally not on the clock, though heavier restrictions on personal freedom during on-call periods can flip that answer.
Deductions From Hourly Pay
An hourly worker who leaves early simply loses those hours from the paycheck. But if the employer charges for uniforms, tools, or damage to property, those deductions cannot drop the effective hourly rate below $7.25 and cannot cut into overtime already earned, even when the loss was the employee’s fault.15U.S. Department of Labor. Fact Sheet #16: Deductions From Wages for Uniforms and Other Facilities Under the Fair Labor Standards Act (FLSA) The rule applies equally whether the employer takes the money through payroll or demands cash reimbursement.
What You Can Recover if You Were Misclassified
Workers who were misclassified as exempt or otherwise denied overtime can recover unpaid wages going back two years from the date they file, or three years if the violation was willful (meaning the employer knew, or showed reckless disregard for whether, its practices broke the law).16eCFR. 5 CFR 551.702 – Time Limits
On top of back wages, courts can award an equal amount as liquidated damages, effectively doubling the recovery. An employer avoids that only by proving it acted in good faith with reasonable grounds to believe it was following the law.17Office of the Law Revision Counsel. 29 U.S. Code 260 – Liquidated Damages A prevailing employee is also entitled to reasonable attorney’s fees, so an FLSA claim usually does not require paying a lawyer out of pocket.18Office of the Law Revision Counsel. 29 U.S. Code 216 – Penalties
Repeat or willful violators face civil penalties up to $2,515 per violation.19U.S. Department of Labor. Civil Money Penalty Inflation Adjustments Willful violations can also draw criminal fines up to $10,000, and imprisonment up to six months for a second offense.20Office of the Law Revision Counsel. 29 USC 216 – Penalties
How to File a Complaint
Complaints go to the Department of Labor’s Wage and Hour Division at 1-866-487-9243 or through its online portal. There is no filing fee, and the complaint is confidential; the DOL will not disclose your name or the nature of your complaint to your employer. Federal law also prohibits retaliation for filing a complaint or cooperating with an investigation.21U.S. Department of Labor. How to File a Complaint If you believe you have been misclassified, gather your pay stubs, any written job description, and your best record of the hours you actually worked before filing; those are the facts an investigation will turn on.