In this instructional video, the presenter warns that many employers mistakenly believe that salaried workers are automatically exempt from overtime under the Fair Labor Standards Act (FLSA). He explains the two‑part federal exemption test: (1) a salary threshold of $684 per week (about $35,568 per year) that must be met, and (2) a duties test requiring the employee’s actual job functions to fall within the executive, administrative, or professional categories defined by the FLSA. The speaker emphasizes that both criteria must be satisfied; title or pay structure alone are insufficient. Misclassifying employees can trigger costly back‑pay, liquidated damages, and Department of Labor investigations. He then outlines three practical steps for employers: compile a list of all salaried employees classified as exempt, run the two‑part test on each, and reclassify any who fail either part, placing them on overtime tracking. He offers assistance through “Guru” for exemption audits and ends with a call to like, subscribe, and ask questions.
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If you have salaried employees and you've never stopped to ask whether they qualify for overtime, this video is for you. Because salary and overtime exemption are not the same thing, and the Department of Labor has a very specific test for telling them apart. Most employers assume that putting someone on salary means they don't have to worry about overtime. That assumption is one of the most common and most expensive wage and hour mistakes in small business. Here's what the law actually says. Let's start with the myth. Salary does not automatically mean overtime exempt. The Fair Labor Standards Act, the federal law that governs overtime, has a two-part test for exemption, and an employee has to meet both parts to qualify. Title and pay structure alone are not enough. Here's how the test works. First, there's a salary threshold. As of today, the federal minimum salary for overtime exemption is $684 per week, or roughly $35,568 per year. Any salaried employee earning below that number is entitled to overtime pay, period. No duties test required, no exceptions for job title. Second, there's a duties test. Even if an employee clears the salary threshold, Their actual job function has to qualify as executive, administrative, or professional work under the FLSA's definitions. A salaried customer service rep or office coordinator may not meet the duties test, which means that they're entitled to overtime regardless of what their offer letter says. Third, both tests have to be met— salary threshold and duties test, not one or the other. This is where most employers get tripped up. They see a salaried employee and stop asking questions. The DOL doesn't. Fourth, getting it wrong is expensive. Misclassifying an employee as exempt triggers back overtime pay, liquidated damages equal to the amount owed, and potential DOL investigation. Multiply that across several employees over 2 and 3 years, and you're looking at a significant liability. All right, so what do you do now? 3 things. Pull your exempt employee list. Every salaried employee you've classified as overtime exempt should be on it. If you don't have a formal list, that's your first action item. Second, run the 2-part test on each one. Does that employee clear the $684 per week salary threshold? And does their actual job function, not their title, their actual day-to-day work, Qualify as executive, administrative, or professional under FLSA definitions. Both answers need to be yes. Third, flag and fix the gaps. Any employee who fails either part of the test should be reclassified as non-exempt and put on overtime tracking immediately. A proactive correction is always less costly than a reactive one. If you're not sure how to run that analysis or have employees that fall into a gray area, Reach out to us at Guru. Exempt classification audits are exactly the kind of thing we help clients work through before it becomes a DOL problem. That's your overtime exemption breakdown. A job title doesn't determine overtime eligibility. A salary threshold and a duties test do, and both have to be met. Like and subscribe for more HR payroll updates. Drop your questions in the comments, and we'll see you in the next one.
