Exempt vs Non Exempt Employee Salary Threshold 2026 FLSA
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The core formula
Formula = Exempt if Salary Basis + Salary Level ≥ $684/week ($35,568/year) + Duties Test all pass (2026 FLSA)
Highly Compensated Employee (HCE) threshold = $107,432/year (relaxed duties test)
If any one of the three tests fails, the employee is non-exempt and must be paid 1.5× for hours over 40 in a workweek. There is no “mostly exempt” — it’s all or nothing.
Step-by-Step: Classifying A Worker Under The 2026 FLSA Rule
Let’s run through a real classification. You’re an “office manager” at a small dental practice in Florida earning $48,000/year.
- Salary basis test: Are you paid a predetermined, fixed salary not subject to reduction based on work quality or quantity? Yes — $48,000/yr passes.
- Salary level test: Is the salary at least $35,568/yr ($684/week)? Yes — $48,000 clears the floor.
- Duties test: Does the primary duty involve exercising discretion and independent judgment on significant matters? Here’s where it gets thorny.
- If you actually manage the office, hire/fire, set policy, and exercise independent judgment, you pass the administrative exemption.
- If you mostly schedule appointments, file insurance claims, and answer phones under direction of the dentist, you fail the duties test — and you’re non-exempt, eligible for OT.
Worked example, salary-level check:
| Salary | Annual | Meets $35,568 Floor? | Meets $107,432 HCE? |
|---|---|---|---|
| $15/hr, 40 hrs | $31,200 | No — non-exempt | No |
| $18/hr, 40 hrs | $37,440 | Yes (but check duties) | No |
| $48,000/yr | $48,000 | Yes (but check duties) | No |
| $55,000/yr | $55,000 | Yes (but check duties) | No |
| $115,000/yr | $115,000 | Yes | Yes — HCE shortcut |
For a quick automated check on your own status, run your salary and duties through the flsa-overtime-eligibility-checker. If you discover you’re non-exempt, the overtime-pay-calculator computes what you’re owed for past OT hours, and the time-and-a-half-calculator handles the rate math.
So what does that mean for you? Salary alone never makes someone exempt. The duties test is where most misclassifications live, and it’s the part employers get wrong most often.
2026 Real Case: The “Assistant Manager” At A Retail Store
A friend of mine worked as an “assistant manager” at a cell phone store in 2024, classified exempt at $42,000. When the 2024 rule raised the threshold to $844/week ($43,888/yr), her employer reclassified her as non-exempt and started paying OT. When the rule was rescinded in May 2026, the employer wanted to flip her back to exempt.
But here’s the catch: under the restored $35,568 threshold, she passes the salary level test — yet her actual duties (running the register, stocking shelves, doing inventory under the store manager’s direction) failed the executive duties test all along. The DOL’s fact sheet #17B is explicit: a “working foreman” who spends more than half their time on the same production work as the employees they supervise is not exempt.
She stayed non-exempt. The store paid her back OT for the weeks it had reclassified her without paying the premium.
For the full mechanics of the salary threshold, our $684 weekly exemption salary limit full explanation goes deeper into the May 2026 restoration. For more on how exemption interacts with OT pay generally, see our time and a half rate calculation guide.
Exemption Quick Reference Table
| Test | Standard Exemption | Highly Compensated (HCE) |
|---|---|---|
| Salary basis | Fixed salary, not subject to reduction | Fixed salary, not subject to reduction |
| Salary level (2026) | $684/week ($35,568/yr) | $107,432/yr total comp |
| Duties test | Full duties test for executive, administrative, or professional | Relaxed duties test, one exempt duty sufficient |
| OT eligibility | None — exempt | None — exempt |
| Common misclassification | ”Manager” title without actual discretion | HCE whose primary duty is manual labor |
Where do people mess this up? They assume a job title or a salary over $35,568 makes them exempt. The DOL looks at what you actually do all day, not what your business card says.
How overtime exemptions actually work in 2026
Overtime exemptions apply only when an employee passes all three prongs of the white-collar test: a fixed salary basis, salary at or above the $684/week ($35,568/year) floor, and the executive, administrative, or professional duties test spelled out in the DOL exemption fact sheet. Failing any one prong means the worker is non-exempt and must be paid 1.5× for hours over 40 in a workweek. Title and salary alone never make someone exempt — the actual job duties have to match the DOL categories.
Frequently Asked Questions
What is the 2026 FLSA salary threshold for exempt employees?
As of May 15, 2026, the standard salary threshold for white-collar exemption is $684 per week, or $35,568 per year. The highly compensated employee threshold is $107,432 per year. The 2024 rule that pushed the threshold to $844 and then $1,128 per week was vacated and rescinded.
Can an employer classify a $40,000/year worker as exempt in 2026?
Only if the worker also passes the duties test for executive, administrative, or professional exemption. The salary ($40,000) clears the $35,568 floor, but salary alone does not make someone exempt. The actual job duties must match one of the DOL-recognized categories.
What happens if a worker is misclassified as exempt?
The employer owes up to two years of back overtime (three years if willful), plus an equal amount in liquidated damages, plus attorneys’ fees and possible penalties. Misclassification is one of the most common and expensive FLSA violations the Department of Labor pursues.
Does the salary threshold reset every year under the 2026 rule?
No. The 2024 rule that would have automatically updated the threshold every three years was rescinded on May 15, 2026. The $684/week threshold is now a fixed figure set by the 2019 rule, with no automatic indexing.
The Bottom Line
Exempt status is a three-part test, not a salary number. Confirm your salary clears the 2026 $684/week floor with the flsa-overtime-eligibility-checker, then look hard at your actual duties — because that’s the test most employers get wrong, and it’s the one that decides whether you’re owed overtime.