Exempt vs. Non-Exempt Employee
Under FLSA, the classification distinguishing employees entitled to overtime and full wage-and-hour protections (non-exempt) from those excluded from one or more such protections (exempt).
Under the Fair Labor Standards Act, employees are classified as either "exempt" or "non-exempt" from minimum wage, overtime, or both. Non-exempt employees are entitled to FLSA's full wage-and-hour protections, including overtime at one and one-half times the regular rate for hours over 40 in a workweek. Exempt employees are excluded from one or more FLSA protections.
The principal "white-collar" exemptions (29 C.F.R. Part 541)
Each generally requires both a duties test and a salary test, though the salary requirement does not apply to teachers or to licensed practitioners of law or medicine, and administrative and professional employees may be paid on a fee basis:
Executive exemption: primary duty is management of the enterprise or a department; customarily directs the work of two or more full-time employees; has authority to hire/fire (or significant input).
Administrative exemption: primary duty is office/non-manual work directly related to management or general business operations; primary duty includes exercise of discretion and independent judgment on significant matters.
Professional exemption: primary duty requires advanced knowledge in a field of science or learning, customarily acquired by prolonged specialized intellectual instruction (learned professional), or invention/imagination/originality/talent in a recognized creative field (creative professional).
Salary basis test
Most exemptions require payment on a "salary basis" of at least $684 per week ($35,568 annually), fixed, predetermined compensation not subject to reduction based on quality or quantity of work. Improper deductions can defeat the exemption.
Other exemptions
Outside sales (no salary requirement); highly compensated employees (HCE, $107,432 annually with relaxed duties test); computer professionals (specific salary or hourly rate); commissioned retail employees under § 207(i).
Common misclassification errors: (1) classifying based on title rather than actual duties; (2) classifying based on salary alone without examining duties; (3) failing the salary-basis test through improper docking of pay for partial-day absences. The Department of Labor periodically revises salary thresholds. The current $684/week level took effect January 1, 2020. A 2024 rule raising it was vacated by a federal court in Texas, and in May 2026 the Department restored the earlier regulatory text (91 Fed. Reg. 27833).
Practice guide: Employment Law Basics for Texas Employers