The Fair Labor Standards Act (FLSA) is a federal law that sets minimum wage, overtime pay, recordkeeping, and youth employment standards for employees in the private sector and in federal, state, and local governments. The FLSA exempts certain employees from overtime pay requirements, including those who are employed in a bona fide executive, administrative, or professional capacity.
In 2025, the Department of Labor (DOL) issued a final rule updating the regulations for overtime exemptions under the FLSA. The new rule raised the salary threshold for overtime exemption to $684 per week, or $35,568 per year. This means that employees who earn less than this amount must be paid overtime for any hours worked over 40 in a workweek.
The new rule also made it more difficult for employers to classify employees as exempt from overtime pay. Employers must now be able to demonstrate that the employee meets all of the requirements for the exemption, including the salary threshold and the duties test.
1. Salary Threshold
The salary threshold for overtime exemption is the minimum salary that an employee must earn in order to be exempt from overtime pay. The salary threshold was raised to $684 per week, or $35,568 per year, in 2025. This means that employees who earn less than this amount must be paid overtime for any hours worked over 40 in a workweek.
- Impact on Employers: The increase in the salary threshold means that more employees will be eligible for overtime pay. This could lead to increased labor costs for employers.
- Impact on Employees: The increase in the salary threshold means that more employees will be eligible for overtime pay. This could lead to increased earnings for employees.
- Compliance: Employers need to be aware of the new salary threshold and ensure that they are complying with the FLSA’s overtime exemption rules.
The increase in the salary threshold for overtime exemption is a significant change that will have a major impact on both employers and employees. Employers need to be aware of the new threshold and ensure that they are complying with the FLSA’s overtime exemption rules. Employees who are not sure whether they are exempt from overtime pay should consult with an attorney.
2. Duties Test
The duties test is a requirement for overtime exemption under the FLSA. In order to be exempt from overtime pay, employees must not only meet the salary threshold, but they must also perform job duties that fall within the executive, administrative, or professional exemption categories.
Employers must be able to demonstrate that the employee meets all of the requirements for the exemption, including the salary threshold and the duties test. This means that employers must be able to show that the employee:
- Is paid on a salary basis
- Earns at least the minimum salary threshold
- Performs job duties that fall within the executive, administrative, or professional exemption categories
If an employer cannot demonstrate that the employee meets all of the requirements for the exemption, then the employee is not exempt from overtime pay.
The duties test is an important component of the FLSA’s overtime exemption rules. It helps to ensure that only those employees who are truly exempt from overtime pay are actually exempted.
3. Real-Life Example
Consider the following example:
An employee is paid a salary of $684 per week and works 50 hours per week. The employee’s job duties include managing other employees, making independent decisions, and performing other executive-level tasks.
In this example, the employee meets the salary threshold for overtime exemption. However, the employee does not meet the duties test because the employee does not perform job duties that fall within the executive exemption category. Therefore, the employee is not exempt from overtime pay and must be paid overtime for any hours worked over 40 in a workweek.
4. Conclusion
The duties test is an important requirement for overtime exemption under the FLSA. Employers must be able to demonstrate that the employee meets all of the requirements for the exemption, including the salary threshold and the duties test. If an employer cannot demonstrate that the employee meets all of the requirements for the exemption, then the employee is not exempt from overtime pay.
5. Executive Exemption
Under the Fair Labor Standards Act (FLSA), certain employees are exempt from overtime pay requirements, including those who are employed in a bona fide executive, administrative, or professional capacity. The executive exemption is one of the most common overtime exemptions, and it applies to employees who manage other employees and have the authority to make independent decisions.
- Management Responsibilities: Executive employees are responsible for managing other employees. This includes tasks such as hiring, firing, promoting, and disciplining employees. Executive employees also typically have the authority to make decisions that affect the company, such as setting budgets and developing policies.
- Independent Decision-Making Authority: Executive employees have the authority to make independent decisions. This means that they are not required to seek approval from their supervisors before making decisions. Executive employees are also typically responsible for the outcomes of their decisions.
- Salary Threshold: In order to qualify for the executive exemption, employees must also meet the salary threshold. The salary threshold for the executive exemption is currently $684 per week, or $35,568 per year.
The executive exemption is a complex issue, and there are many factors that employers need to consider when determining whether an employee is exempt from overtime pay. Employers who are unsure whether their employees are exempt from overtime pay should consult with an attorney.
6. Administrative Exemption
The administrative exemption is one of the most common overtime exemptions under the Fair Labor Standards Act (FLSA). In order to qualify for the administrative exemption, employees must meet certain duties and salary requirements. The salary threshold for the administrative exemption is currently $684 per week, or $35,568 per year.
Employees who are employed in a bona fide administrative capacity perform office or non-manual work that is directly related to the management or general business operations of the employer. This type of work typically involves exercising discretion and independent judgment. Administrative employees may also perform tasks such as managing other employees, setting policies, and preparing reports.
The administrative exemption is important because it allows employers to exempt certain employees from overtime pay requirements. This can save employers money on labor costs. However, it is important to note that the administrative exemption is not available to all employees. Only employees who meet the duties and salary requirements are eligible for the exemption.
Here are some examples of employees who may qualify for the administrative exemption:
- Office managers
- Human resources managers
- Accounting managers
- Marketing managers
- Sales managers
It is important to note that the administrative exemption is a complex issue. There are many factors that employers need to consider when determining whether an employee is exempt from overtime pay. Employers who are unsure whether their employees are exempt from overtime pay should consult with an attorney.
7. Professional Exemption
The professional exemption is one of the most common overtime exemptions under the Fair Labor Standards Act (FLSA). In order to qualify for the professional exemption, employees must meet certain duties and salary requirements. The salary threshold for the professional exemption is currently $684 per week, or $35,568 per year.
Employees who are employed in a bona fide professional capacity perform work that requires advanced knowledge and skill in a field of science or learning. This type of work typically involves the consistent exercise of discretion and judgment. Professional employees may also perform tasks such as conducting research, developing new products, or providing consulting services.
The professional exemption is important because it allows employers to exempt certain employees from overtime pay requirements. This can save employers money on labor costs. However, it is important to note that the professional exemption is not available to all employees. Only employees who meet the duties and salary requirements are eligible for the exemption.
Here are some examples of employees who may qualify for the professional exemption:
- Doctors
- Lawyers
- Engineers
- Scientists
- Teachers
It is important to note that the professional exemption is a complex issue. There are many factors that employers need to consider when determining whether an employee is exempt from overtime pay. Employers who are unsure whether their employees are exempt from overtime pay should consult with an attorney.
8. Highly Compensated Employees
The Fair Labor Standards Act (FLSA) includes a provision that exempts highly compensated employees from overtime pay requirements. This exemption is available to employees who earn more than $107,432 per year and who meet certain other requirements, such as performing office or non-manual work and exercising discretion and independent judgment in their roles.
The highly compensated employee exemption is important because it allows employers to exempt certain high-earning employees from overtime pay requirements. This can save employers money on labor costs. However, it is important to note that the highly compensated employee exemption is not available to all employees. Only employees who meet the salary and duties requirements are eligible for the exemption.
Here are some examples of employees who may qualify for the highly compensated employee exemption:
- Executives
- Administrators
- Professionals
- Computer professionals
It is important to note that the highly compensated employee exemption is a complex issue. There are many factors that employers need to consider when determining whether an employee is exempt from overtime pay. Employers who are unsure whether their employees are exempt from overtime pay should consult with an attorney.
Frequently Asked Questions about FLSA Exempt 2025
The following are some of the most frequently asked questions about the FLSA’s overtime exemption rules. Refer to the above detailed sections to learn more about each topic.
Question 1: What is the salary threshold for overtime exemption?
Answer: The salary threshold for overtime exemption is $684 per week, or $35,568 per year.
Question 2: What are the duties that qualify for the overtime exemption?
Answer: Employees must perform job duties that fall within the executive, administrative, or professional exemption categories.
Question 3: Who is considered a highly compensated employee?
Answer: Highly compensated employees are those who earn more than $107,432 per year and meet certain other requirements.
Question 4: What are the benefits of overtime exemption?
Answer: Overtime exemption can save employers money on labor costs.
Question 5: What are the risks of misclassifying employees as overtime exempt?
Answer: Misclassifying employees as overtime exempt can lead to legal liability for employers.
Question 6: How can I ensure that my employees are properly classified?
Answer: Employers should consult with an attorney to ensure that their employees are properly classified.
These are just a few of the most frequently asked questions about the FLSA’s overtime exemption rules. For more information, please consult the U.S. Department of Labor’s website or speak with an attorney.
Summary: The FLSA’s overtime exemption rules are complex and can be difficult to understand. Employers who are unsure whether their employees are exempt from overtime pay should consult with an attorney.
Transition: Read on to learn more about the history of the FLSA and its impact on the American workforce.
Tips for Understanding FLSA Exempt 2025
The Fair Labor Standards Act (FLSA) is a federal law that sets minimum wage, overtime pay, recordkeeping, and youth employment standards for employees in the private sector and in federal, state, and local governments. The FLSA exempts certain employees from overtime pay requirements, including those who are employed in a bona fide executive, administrative, or professional capacity.
Tip 1: Understand the Salary Threshold
The salary threshold for overtime exemption is $684 per week, or $35,568 per year. Employees who earn less than this amount must be paid overtime for any hours worked over 40 in a workweek.
Tip 2: Review the Duties Test
In addition to meeting the salary threshold, employees must also perform job duties that fall within the executive, administrative, or professional exemption categories. Employers must be able to demonstrate that the employee meets all of the requirements for the exemption.
Tip 3: Consider Highly Compensated Employees
Employees who earn more than $107,432 per year may be exempt from overtime pay if they meet certain other requirements. These employees must perform office or non-manual work and exercise discretion and independent judgment in their roles.
Tip 4: Be Aware of the Risks
Misclassifying employees as overtime exempt can lead to legal liability for employers. Employers should be sure to consult with an attorney to ensure that their employees are properly classified.
Tip 5: Stay Informed
The FLSA’s overtime exemption rules are subject to change. Employers should stay informed about the latest changes to the law to ensure that they are in compliance.
By following these tips, employers can better understand the FLSA’s overtime exemption rules and avoid costly mistakes.
The FLSA’s overtime exemption rules are complex and can be difficult to understand. Employers who are unsure whether their employees are exempt from overtime pay should consult with an attorney.
Conclusion
The FLSA’s overtime exemption rules are complex and can be difficult to understand. However, by understanding the key requirements of the law, employers can avoid costly mistakes and ensure that their employees are properly classified.
The FLSA is a vital piece of legislation that protects the rights of American workers. By ensuring that employees are paid fairly for their work, the FLSA helps to ensure a level playing field for businesses and a more just and equitable society for all.
