Compensation

Exempt Employee

Definition

What is Exempt Employee?

An Exempt Employee is a worker who is not covered by the overtime pay requirements of labor laws such as the US Fair Labor Standards Act, typically because they are salaried and meet specific criteria.

Featured snippet

A salaried employee not legally entitled to overtime pay under labor law.

In Practice

How Exempt Employee works?

Under the US Fair Labor Standards Act (FLSA), exempt employees are not entitled to overtime pay — they can be required to work more than 40 hours per week without additional compensation. Exemption requires meeting both a salary threshold (currently $684 per week, though subject to periodic updates) and a duties test confirming the employee's primary work is executive, administrative, professional, computer-related, or outside sales in nature. The most common misclassification error is applying exempt status to all salaried employees regardless of duties — salary alone does not establish exemption. An office assistant paid $800 per week who performs routine clerical work fails the duties test and is non-exempt despite being salaried, entitling them to overtime pay for all hours above 40 per week.

By the numbers

Key Statistics

What the research says about employee engagement.

$15 billion

The US Department of Labor estimates that wage theft through FLSA overtime violations costs American workers approximately $15 billion annually, with misclassification of non-exempt employees as exempt being among the most common and most costly violation types.

$200,000

FLSA overtime violation settlements average $200,000 to $500,000 for class action cases covering multiple employees, with back pay covering up to 3 years of unpaid overtime plus liquidated damages equal to the back pay amount and attorney fees.

$1,059

The DOL proposed increasing the FLSA salary threshold for exempt status to $1,059 per week ($55,000 annually) in 2023 — a change that would reclassify approximately 3.6 million currently exempt workers as non-exempt if finalized.

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Also known as

Synonyms and Translations

Other ways this term appears across industries and languages.

Synonyms

Salaried Exempt

Non-Overtime Eligible Employee

White Collar Exempt

Translations

🇸🇦

Arabic

موظف معفى

🇫🇷

French

Employé exempté

🇮🇳

Hindi

छूट प्राप्त कर्मचारी

🇵🇰

Urdu

مستثنیٰ ملازم

🇵🇭

Tagalog

Exempt na Empleyado

People may ask

People May Ask

Common questions about employee engagement.

What is an exempt employee?

An exempt employee is one who is not entitled to overtime pay under the Fair Labor Standards Act, usually because they are salaried and meet executive, administrative, or professional criteria.

What are the main categories of exempt employees?

The FLSA defines exemptions for executive, administrative, professional, computer-related, and outside sales employees who meet specific salary and duty tests.

What is the minimum salary threshold for exempt status?

As of recent updates, the federal FLSA minimum salary for most exempt employees is $684 per week, though state laws may set higher thresholds.

Can an exempt employee be required to work unlimited hours?

Legally, yes, though employers must pay at least the minimum exempt salary regardless of hours worked. Excessive hours can still affect morale and turnover.

What is the difference between exempt and non-exempt employees?

Non-exempt employees must receive overtime pay for hours worked beyond 40 per week. Exempt employees are not entitled to overtime regardless of hours.