Overtime Pay on Salary 2026: Are Salaried Workers Eligible?

Are Salaried Employees Entitled to Overtime Pay?

One of the most common wage and hour misconceptions in the U.S. is that salary equals exempt. It does not.

Under the FLSA, whether you receive overtime pay depends on three tests: your salary level, your salary basis, and your job duties. Failing any one test makes you non-exempt — and entitled to time and a half for hours over 40.

The Three Tests for Overtime Exemption

1. Salary Basis Test

You must be paid a predetermined, fixed salary that does not vary with hours worked or production. Hourly workers, day-rate workers, and piece-rate workers automatically fail this test and are owed overtime.

2. Salary Level Test (2026)

You must earn at least $684 per week ($35,568 per year). This threshold was set in 2019 and confirmed after the 2024 court ruling struck down the proposed $55,068 increase. States with higher thresholds:

• California: $1,280/week ($66,560/year) for employers with 26+ employees
• New York: $1,237.50/week ($64,350/year) in NYC/Long Island/Westchester
• Washington: $1,302.24/week ($67,716/year)
• Colorado: $1,057.69/week ($55,000/year)

3. Duties Test

Your primary job duties must fit one of these categories:

• Executive: Managing a department, directing at least 2 employees, authority to hire/fire
• Administrative: Office work directly related to management policies, exercises discretion and independent judgment
• Professional: Requires advanced knowledge in a field of science or learning (typically a degree)
• Computer: Systems analysis, programming, software engineering ($27.63/hour or $684/week)
• Outside Sales: Primary duty is making sales away from the employer's premises

Salaried but Non-Exempt: How It Works

If you earn a salary but fail any of the three tests, your employer must:

• . Convert your salary to an hourly rate for overtime purposes
• . Pay 1.5× that rate for hours over 40

Formula:

• Weekly equivalent = Annual Salary ÷ 52
• Regular hourly rate = Weekly Salary ÷ Actual Hours Worked (up to 40)
• OT rate = Hourly Rate × 1.5

Example — A $45,000/year administrative assistant:

• Weekly salary: $45,000 ÷ 52 = $865.38
• Hourly rate (for 45-hour week): $865.38 ÷ 45 = $19.23
• OT premium: 5 hours × ($19.23 × 1.5) = $144.23
• Total weekly pay: $1,009.61

This is called the "fluctuating workweek" method, and it is controversial. Many courts require the employer to have a clear agreement with the employee before using it.

Common Salaried Misclassifications

The U.S. DOL recovers billions annually for these patterns:

• Assistant managers who spend 80%+ of time on non-managerial tasks (stocking, cashiering, cleaning)
• Office coordinators who do not exercise independent judgment
• IT help desk technicians who lack programming or systems analysis duties
• Inside sales reps (outside sales exemption only applies to away-from-premises selling)
• Social media managers at small businesses who also serve as receptionists

If your job description does not match your actual daily tasks, you may be misclassified.

State-Specific Salaried Overtime Rules

Some states go further than FLSA:

• California: Salary threshold is nearly double the federal level; duties test is stricter
• New York: Similar high threshold; misclassified workers get liquidated damages
• Alaska, Nevada: Daily overtime applies to salaried workers too if their effective hourly rate falls below the threshold
• Pennsylvania: Banned the fluctuating workweek method entirely in 2020

How to Calculate Your Overtime as a Salaried Worker

Step 1: Divide your annual salary by 52 to get your weekly salary.

Step 2: Divide your weekly salary by your normal hours (usually 40) to get your regular hourly rate.

Step 3: Multiply that rate by 1.5 to get your overtime rate.

Step 4: Multiply your OT rate by hours over 40.

Use our free Overtime Pay Calculator to handle this automatically for any salary and any state.

What to Do If You Are Misclassified

• . Track your hours: Log actual start, stop, and break times
• . Save job descriptions: Compare what you were hired to do vs. what you actually do
• . Talk to HR: Request a written classification review
• . File a complaint: U.S. DOL Wage and Hour Division (free, confidential)
• . Consult an attorney: Many employment lawyers offer free consultations and take cases on contingency

Frequently Asked Questions

Can my employer switch me from salary to hourly to avoid paying overtime?

No. If you were non-exempt on salary, you remain non-exempt on hourly. Changing pay structure does not change your legal rights.

What if my employer says I am exempt because I am on a "flat salary"?

The flat salary is just the salary basis test. You must also pass the salary level ($684+/week) AND the duties test.

Do salaried workers get overtime in California?

Yes, if they earn under $66,560/year (26+ employee employers) or fail the stricter California duties test.

What is the 2026 salary threshold for overtime exemption?

$35,568 per year ($684 per week) under federal FLSA. Several states set higher thresholds. See our FLSA Salary Threshold 2026 Update.

Are nonprofit salaried workers exempt?

Nonprofit status does not exempt workers from FLSA. The same $684/week and duties tests apply.

Run your own numbers

Once you convert a salary to an hourly regular rate, the time and a half calculator prices the overtime hours and the FLSA overtime calculator checks whether your duties keep you non-exempt.