FLSA Overtime Threshold

How the Threshold Works

The FLSA divides employees into exempt and non-exempt. Non-exempt employees must receive overtime; exempt employees do not. To qualify as exempt from overtime, a salaried employee must pass two tests: the salary level test (earning at least $684/week as of 2024) and the duties test (actually performing executive, administrative, or professional duties as defined by the DOL). An employer cannot make an employee overtime-exempt simply by paying them a salary or giving them a title — both tests must be satisfied.

The Salary Level Test

• Federal minimum: $684/week ($35,568/year) — employees below this threshold are automatically entitled to overtime regardless of their duties or job title.
• Highly compensated employees (HCE) exemption: employees earning $107,432/year or more who perform at least one exempt duty may qualify for a simplified HCE exemption.
• State thresholds: California ($66,560/year), New York ($58,500 in NYC), Washington, and other states set significantly higher thresholds — the higher state or federal threshold controls.
• The threshold is not indexed to inflation automatically — it requires a DOL rulemaking to update, which has led to long periods where the threshold didn't keep pace with wages.

The Duties Test

• Executive exemption: primary duty is managing the enterprise or a department; directs the work of at least two employees; has authority to hire/fire or influence those decisions.
• Administrative exemption: primary duty is office or non-manual work related to management or business operations; exercises discretion and independent judgment on significant matters.
• Professional exemption: primary duty requires advanced knowledge in a field of science or learning, customarily acquired by a prolonged course of specialized intellectual instruction (i.e., a degree or equivalent).
• Computer employee exemption: applies to certain IT roles at $684/week salary or $27.63/hour — one of the few exemptions that can be met hourly.

Practical Implications

• If you earn below $684/week as a salaried employee, your employer owes you overtime — even if your offer letter says 'exempt' or 'salary includes all hours.'
• Misclassification is common: employers often classify employees as exempt to avoid overtime costs without verifying the duties test. An employee whose actual job involves routine work, limited decision-making, and close supervision likely fails the duties test regardless of title.
• Back pay: employees who were improperly classified can recover up to two years of unpaid overtime (three years if the violation was willful), plus an equal amount in liquidated damages, plus attorney's fees.
• Filing a complaint: the DOL Wage and Hour Division investigates FLSA violations; employees can also file a private lawsuit or join a collective action.

Example

A marketing coordinator earning $38,000/year ($730/week) regularly works 50-hour weeks. Her employer classifies her as exempt — 'salaried professional.' But her duties are largely routine: scheduling social posts, pulling analytics reports, and coordinating with vendors using established templates. She exercises little independent judgment on significant matters and has no authority over other employees. She fails the administrative duties test. Her employer owes her 10 hours of overtime per week at 1.5x her regular rate ($13.27/hour regular rate × 1.5 = $19.90/hour overtime). Over a year that's roughly $10,000 in unpaid overtime wages — recoverable as back pay plus liquidated damages.