Unpaid Overtime: Exempt vs Non-Exempt, Why a Salary Does Not Settle It, and How to Recover What You Are Owed
The most common wage violation in America is an employer calling a job exempt because it pays a salary. The law looks at what you do, not what you are called.
The short version
- Federal law requires time and a half for every hour over 40 in a workweek unless you are exempt — and exemption requires a salary of at least $684 a week and duties that fit a specific category.
- Titles, salaries and "we don't pay overtime" policies do not make you exempt. Assistant managers, inside sales staff, dispatchers, paralegals and most administrative staff are usually owed overtime.
- You can recover two years of back pay (three if willful), doubled as liquidated damages, plus attorney's fees; the Labor Department investigates for free; retaliation is illegal.
The Fair Labor Standards Act has required overtime pay since 1938, and employers have been finding ways around it for nearly as long. The most common is misclassification: paying an employee a salary, giving the job a title with "manager" or "coordinator" in it, and treating the employee as exempt from overtime when the law says otherwise. The Department of Labor recovers hundreds of millions of dollars a year for workers in such cases, and private suits recover far more. This guide explains who is owed overtime, how to tell, what the claim is worth and how to pursue it.
The rule
A covered employee who works more than 40 hours in a workweek must be paid at least one and a half times the regular rate for the excess hours. The workweek is any fixed seven-day period the employer designates; hours cannot be averaged across weeks, and private employers cannot substitute time off for overtime pay. The regular rate includes most bonuses, commissions and shift differentials, not just the base wage. Nearly all employees are covered; the exceptions are the exemptions.
Exempt or not: the three-part test
| Requirement | What it means | Common failures |
|---|---|---|
| Salary basis | A fixed amount each pay period that is not reduced for the quality or quantity of work | Docking pay for partial days or short absences destroys the exemption |
| Salary level | At least $684 a week ($35,568 a year) under federal law; higher in several states | Any salaried employee below the threshold is owed overtime regardless of duties |
| Duties | Primary duty fits an exemption: executive (manages a unit, directs two or more full-time employees, has hiring and firing authority or influence); administrative (office work directly related to management or business operations, exercising independent judgment on matters of significance); professional (advanced knowledge in a field of science or learning, or creative work); outside sales; computer employees at $27.63 an hour or the salary level | "Managers" who spend most of their time on the same work as hourly staff; "administrative" staff whose work is routine and supervised; inside sales staff, who are not outside sales |
All three parts must be met. An employee who fails any one of them is non-exempt and owed overtime for every hour over 40, whatever the job title and whatever the offer letter said.
The threshold and the states
The Department of Labor's 2024 rule would have raised the salary threshold to $844 a week in July 2024 and $1,128 in January 2025, with automatic increases afterward. A federal court in Texas vacated the rule nationwide in November 2024, and the $684 figure set in 2020 remains the federal floor. Many states set their own: California requires a salary of at least twice the state minimum wage for full-time work, which exceeds $68,000 a year; New York's thresholds are above $1,200 a week in and around New York City; Washington, Colorado and Alaska index theirs annually. California and a few other states also require daily overtime — time and a half after eight hours in a day — and double time in some circumstances. Where state law is more protective, the employer must follow it.
Other common violations
- Off-the-clock work. Answering emails at night, setting up before a shift, closing after clocking out, mandatory meetings, security screenings in some states — all compensable.
- Automatic meal deductions for breaks the employee did not take.
- Independent contractor labels for workers who are employees in fact; contractors have no overtime rights, which is the point of the label.
- Comp time in lieu of overtime, lawful only for public employers.
- Averaging a 50-hour week against a 30-hour week.
- Excluding bonuses from the regular rate when calculating the overtime premium.
What a claim is worth
Federal law adds liquidated damages equal to the unpaid wages unless the employer proves it acted in good faith on reasonable grounds, which is rarely established. A federal income-tax deduction for overtime premium pay, enacted in 2025 for tax years 2025 through 2028, applies to overtime actually paid — one more reason to be paid it.
How to recover it
- Reconstruct your hours. Time records, schedules, badge and login data, texts and emails sent outside working hours, and your own contemporaneous notes. If the employer kept no accurate records, the Supreme Court held in Anderson v. Mt. Clemens Pottery (1946) that your reasonable estimate shifts the burden to the employer to disprove it.
- Calculate the amount as above, week by week.
- Put it in writing to the employer. A dated request documents the complaint and triggers retaliation protection; the Supreme Court held in Kasten v. Saint-Gobain (2011) that even oral complaints are protected, but writing removes doubt.
- File a complaint. The Department of Labor's Wage and Hour Division (1-866-487-9243) investigates free of charge, keeps your name confidential where possible and can recover back pay for you and co-workers in the same position; state labor departments enforce state law, which is often more generous and in some states carries penalties on top of back pay.
- Or sue. Wage lawyers take overtime cases on contingency because the statute awards fees to prevailing employees. Co-workers can join a collective action under the FLSA or a class action under state law. Filing suit stops the limitations clock; a Labor Department complaint does not, so do not wait on an investigation if the two-year window is closing.
Retaliation
Firing, demoting, cutting hours, reassigning or threatening an employee for asserting overtime rights is a separate violation with its own remedies: lost wages, reinstatement or front pay, and liquidated damages. Immigration status is not a defense to a wage claim, and employers who threaten to report workers face additional liability in several states.
Does being salaried mean I am exempt?
No. Exemption requires a salary basis, a salary of at least $684 a week, and duties that fit the executive, administrative, professional, outside sales or computer exemptions; a salaried employee doing hourly-type work is owed overtime.
What is the salary threshold in 2026?
$684 a week federally after a court vacated the 2024 increase; California, New York, Washington, Colorado and others set higher thresholds that govern where they apply.
How far back can I claim?
Two years federally, three if willful, with liquidated damages doubling the recovery; state periods run to six years in New York and three to four in California.
Can I be fired for complaining?
No. Retaliation is illegal, oral complaints are protected under Kasten, and a written complaint is the safest record.
Workers in states with daily overtime, higher thresholds or longer limitations periods should check their state labor department's website; the state claim is often the better one. The Counsel's state-by-state guide to non-compete rules covers the other restriction employers most often overstate.
The Counsel Rights Desk
The Rights Desk writes explainers on consumer, employment, housing and health law for readers without lawyers. Every guide is reviewed by a practicing attorney before publication.
This guide is for general information only and is not legal advice. Salary thresholds, exemptions and limitations periods vary by state and change; consult an employment attorney or your state labor department about your situation.