Key Takeaways

  • Salaried employees can be exempt or non-exempt under the FLSA, impacting overtime eligibility.
  • Misclassification can lead to lost wages and legal issues for employers.
  • California labor laws provide greater protections, including meal and rest breaks and higher salary thresholds.
  • Rights include protection from wrongful termination, discrimination, and illegal wage deductions.
  • Salaried employees may still receive overtime in some cases if misclassified.
  • Employers must comply with both federal and state standards, whichever is more beneficial to the employee.

Salary Employees Laws

Salary employee laws are rules and regulations set forth by the Fair Labor Standards Act (“FLSA”). It covers certain requirements for salaried employees regarding pay and overtime.

A few occupations are rejected in the statute itself. When in doubt, if an occupation is represented by some other government work law, the FLSA does not have any significant bearing, i.e., railroad employees as these employees are covered by the Railway Labor Act. Furthermore, truck drivers are governed by the Motor Carriers Act, and not the FLSA. If the employee is exempt under the FLSA, then this means that the employee has absolutely no rights at all under the FLSA overtime rules. Therefore, when it comes to working more than 40 hours a week, an employee cannot be paid additional compensation. Essentially, exempt employees do not get paid an hourly rate, do not punch a timeclock, do not makeup hours, do not work a particular schedule, and are not protected under the FLSA whatsoever. However, that doesn’t mean that exempt employees don’t have any rights. In fact, most exempt employees do in fact have rights under employment contracts and the overall employee policies of the business.

Key Legal Protections for Salaried Employees

Salaried employees, whether exempt or non-exempt, have specific legal protections under federal and state laws. These include:

  • Protection from Unlawful Deductions: Employers cannot deduct pay from exempt salaried employees for partial-day absences unless certain FMLA or disciplinary conditions are met.
  • Discrimination and Retaliation Protections: All salaried employees are protected from workplace discrimination, harassment, and retaliation under Title VII, ADA, and other laws.
  • Right to a Safe Workplace: The Occupational Safety and Health Act (OSHA) guarantees employees a workplace free of serious hazards.
  • Right to File Complaints: Salaried workers can report labor law violations without fear of retaliation, including wage disputes or safety concerns.

These protections apply regardless of whether the employee is classified as exempt under the FLSA.

Exempt or Nonexempt     

It is important to know the difference between exempt and non-exempt. Exempt employees usually receive a salary. Therefore, they do not receive an hourly rate. Non-exempt employees, however, receive an hourly rate and are generally permitted and required to receive overtime pay. This distinction is important so that you can fully understand the salary laws for exempt employees.

Employees who are paid under $23,600 consistently ($455 consistently) are automatically non-exempt as it doesn’t meet the required monetary threshold under the FLSA. However, there are additional considerations that you must keep in mind, particularly for workers who earn tips and commissions. Therefore, these amounts are generally taken into consideration when utilizing this monetary threshold. Furthermore, the $455/week test is met with a strict standard, as any deviation in this amount can warrant an employee’s exempt status into a non-exempt status.  

Common Misclassification Issues

Misclassifying employees as exempt when they should be non-exempt is a common and costly employer mistake. Signs of misclassification include:

  • Being required to perform non-exempt duties like manual labor or routine tasks without managerial authority
  • Working overtime without additional pay despite lacking executive or administrative responsibilities
  • Being salaried but earning below the FLSA or applicable state threshold

In California, for example, the minimum salary threshold for exemption is twice the state minimum wage for full-time employment—a higher standard than the federal rule. Misclassified employees may be entitled to back pay, penalties, and attorney fees.

Duties Test

If an employee meets the salary test mentioned above, he or she may still remain exempt even though that monetary threshold is not met. For example, if certain duties are performed on the job, i.e., exempt job duties, then that person could, in fact, be exempt and not a non-exempt employee. Some of these job duties include:

  • Supervision of two or more employees
  • Managing a process
  • Has the ability to hire/terminate/promote/assign duties and people

Keep in mind that merely supervising people is not sufficient. The individual must also have the ability and duty to interview, train, set rates of pay, plan and determine work techniques, provide safety in the workplace, monitor work for legal and regulatory compliance, as well as other similar job duties. Therefore, within each of the three elements mentioned above, additional duties must be met.

Similarly, the employee must not just manage a process, but have decision-making abilities in the day to day operations of that process, including changes, enhancements, etc.

The last element, which includes the ability to hire and fire employees, as well as promote and assign duties, means that the employee must have full access to all of these actions. He or she must be able to make a sole determination in who can and should be promoted, hired, or fired. While the employee may need to seek consultation from outside/inside counsel or even senior management, the initial determination will need to be made by the employee in the supervisory position.

Salary Threshold and Minimum Pay

To qualify as exempt, employees must meet the salary basis and salary level tests in addition to the duties test. The federal minimum salary threshold is currently $684 per week ($35,568 annually). However, in California, the threshold is significantly higher:

  • As of 2025, salaried exempt employees in California must earn at least $66,560 annually (or $1,280 per week) for employers with 26+ employees.
  • For employers with fewer than 26 employees, the threshold is lower but still above the federal minimum.

If an employee earns less than these amounts, they are generally considered non-exempt, regardless of job duties.

Exempt Professional Job Duties   

This includes learned professionals. A learned professional is someone who has had advanced training in a certain area, usually in an area in which an advanced degree is required. Therefore, it generally requires an advanced degree as well as specific job training and knowledge of a particular area that others don’t otherwise have access to unless they obtain a specific degree. This can include any one of the following:

  • Lawyers
  • Doctors
  • Engineers
  • Teachers
  • Dentists
  • Clergy

Also included in this category are creative professional job duties. These duties include imagination, invention, talent, and often refer to those working as singers, actors, dancer, writers, etc.

If you find yourself in this type of occupation or utilizing these skills in your occupation, you are likely exempt.

Exempt Administrative Job Duties

Office work that is directly related to management or the overall daily business operations for the employer that involves significant matters is an exempt administrative job duty. All elements within this statement must be met. Therefore, the work must be office work (not manual work) that is directly related to the general and overall business operations. It must also involve the exercising of independent judgment. Lastly, it must be work that involves significant matters.

Secretaries or low-level administrative assistants are not included in this exemption. It must be a high-level type of position whose primary job function is to keep the operations of the business going. This could include someone like a Chief Operating Officer (“COO”). While an argument can be made that some Secretaries are considered high level, it depends on who the secretary is supporting. If the secretary is, in fact supporting the CEO, there is a better argument for an exemption. However, if the secretary is assisting a Director, and there are hundreds of Directors for that business, then the security is not exempt.

Meal and Rest Break Entitlements

Even some salaried employees in California may be entitled to meal and rest breaks if they are non-exempt. Requirements include:

  • Meal Breaks: A 30-minute unpaid break for every 5 hours worked.
  • Rest Breaks: A 10-minute paid rest for every 4 hours worked or major portion thereof.

If an employer fails to provide required breaks, employees may be owed one hour of additional pay per day per missed break.

Computer-Related Roles

Those operating in this industry, particularly computer software engineers, computer analysts, computer programmers, and the like all are generally exempt. However, certain job duties must be performed by these employees, including:

  • Working on hardware and software functionalities
  • Designing, developing, documenting, and analyzing computer systems and programs
  • Testing such programs to ensure they work properly
  • Enhancing, modifying, or removing such computer systems

Highly Compensated Employees

Highly compensated employees are those who perform office (non-manual) work and are paid at least $100,000/year, at least $455/week. If you are paid less than $455/week and are suddenly paid a large lump sum at one given point in time, then you are not part of this exemption. In addition, you must meet one of the duties in the exempt executive, administrative, or professional employee category in order to qualify for this exemption.

While there are several exemptions, each one has a particular set of elements that must be met. Therefore, it is not a one-part test that can be easily attained. If a company is paying you as an exempt employee based on one of these exemptions, but you believe that you should, in fact, be considered a non-exempt employee, then you will want to visit the Department of Labor or FLSA website to ensure that you meet the requirements for that particular exemption.

State Law Variations: California Example

California has some of the most employee-friendly wage and hour laws. Distinctions from federal law include:

  • Higher salary thresholds for exemption
  • More restrictive classification criteria, especially for administrative and professional roles
  • Greater rights for non-exempt salaried employees, such as overtime pay and mandated breaks

Additionally, California law requires that salaried employees be paid their full weekly salary if they perform any work during the week, with very limited exceptions. Employers must also maintain accurate time records, even for salaried staff, to ensure compliance with wage laws.

Frequently Asked Questions

  1. Can salaried employees receive overtime?
    Yes, if they are classified as non-exempt under federal or state law, they are entitled to overtime pay even if they receive a salary.
  2. What rights do salaried employees have if misclassified?
    They may be entitled to back pay for unpaid overtime, penalties, interest, and legal representation to recover wages.
  3. Are salaried employees entitled to breaks?
    In states like California, non-exempt salaried employees are entitled to meal and rest breaks. Exempt employees generally are not, unless the employer chooses to provide them.
  4. Can employers deduct from a salaried employee’s pay?
    Only in limited circumstances, such as unpaid leave under FMLA or full-day disciplinary suspensions. Partial-day deductions are usually not allowed.
  5. How do I know if I’m correctly classified as exempt?
    Review the salary level and duties tests under both the FLSA and your state laws. When in doubt, consult an employment attorney to evaluate your role and rights.

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