Understanding Overtime Eligibility: Exempt vs. Non-Exempt
When converting a salary to an hourly wage with overtime, understanding the distinction between exempt and non-exempt employees is crucial under the Fair Labor Standards Act (FLSA). Non-exempt employees are entitled to overtime pay at a rate of 1.5 times their regular pay for hours worked over 40 in a workweek. To qualify for exemption, employees must meet specific salary and duties tests, including a salary threshold of $684 per week, equating to $35,568 annually as of 2026.
Misclassifying employees can lead to significant penalties, so it's important to correctly identify their status. Exempt employees typically include those in executive, administrative, or professional roles who meet the salary and duties criteria. Failure to correctly classify employees can result in back pay for unpaid overtime and fines, underscoring the importance of compliance with both federal and state regulations.