Which Salaried Employees Still Get Overtime (2026 Thresholds and Duties Tests)

Putting someone on salary does not take them out of overtime. A salaried employee is exempt only if they pass a salary test and a duties test, and a missing piece in either one means every hour over 40 is owed at time and a half. This guide covers the federal numbers, the states that set a higher bar, and what to check before you convert a shift lead. All figures are as of November 2026.

Does being salaried mean an employee is exempt from overtime?

No. Salary is one of three things the law looks at, and it is the easiest one to get right. The employee has to be paid on a salary basis, the amount has to clear a minimum, and the work they actually do has to fit an executive, administrative, or professional description. Fail any one and the employee is covered by overtime, whatever the offer letter says.

The DOL puts the last point bluntly in its overtime fact sheet: "Job titles do not determine exempt status". A "shift manager" who spends the day on the register is a cashier with a longer title. A "team lead" who sets the schedule, trains the new hires, and has a say in who gets hired may be exempt. The title tells you nothing either way.

If you want the pay-structure side of this decision (benefits, predictability, how each model feels to staff), our salary vs hourly guide covers it. This post is about the narrower question that decides whether converting someone to salary is legal: which salaried employees still get overtime.

What is the federal salary threshold today?

The federal standard salary level is $684 per week, which is $35,568 a year. That is the figure the DOL shows on its overtime salary levels page, and it matches the text of 29 CFR 541.600, which says an exempt employee must be paid "not less than $684 per week."

You may have seen higher federal numbers in the news. The DOL adopted a rule in 2024 that raised the level in steps, to $844 a week in July 2024 with $1,128 planned for January 2025. A federal court in the Eastern District of Texas vacated that rule on November 15, 2024. In May 2026 the DOL issued a technical amendment that removed the 2024 text from the regulations and restored the 2019 text, $684 included, effective May 15, 2026. Because this is a number that has been fought over, it is worth re-checking the DOL page every January and any time you hear about a new rule.

Two other federal figures matter for a small operator:

• The highly compensated employee test sets a higher bar: total annual compensation of at least $107,432, which must include at least $684 per week paid as salary or fee, per 29 CFR 541.601.
• Up to 10 percent of the salary level can come from nondiscretionary bonuses, incentives, and commissions, but only if they are paid at least annually, per 29 CFR 541.602. That rule does not apply to highly compensated employees.

For a 20-person operator the standard level is the one that matters. A shift lead paid $750 a week clears the federal salary test with $66 a week to spare. That is exactly why the duties test is where most conversions go wrong.

What does "salary basis" mean, and what breaks it?

Being paid on a salary basis means the employee gets a fixed amount every pay period that does not shrink or grow with the quality or quantity of work. The rule in 29 CFR 541.602 is that an exempt employee "must receive the full salary for any week in which the employee performs any work without regard to the number of days or hours worked."

In practice, that means you cannot dock a salaried manager for a slow Tuesday you sent them home early. The regulation says an employee is not paid on a salary basis if deductions are made for absences "occasioned by the employer or by the operating requirements of the business."

There are narrow exceptions, all built around full days:

• Full-day absences for personal reasons other than sickness or disability.
• Full-day absences for sickness or disability under a bona fide plan or policy.
• Unpaid disciplinary suspensions of a full day or more, imposed under a written policy that applies to all employees.
• Proportional pay in the first and last week of employment, and for unpaid FMLA leave.

A manager who takes a day and a half off for personal reasons can be docked for the one full day, not the half. Partial-day deductions are the easy mistake to make, and the DOL's salary basis fact sheet is clear that a predetermined amount "cannot be reduced because of variations in the quality or quantity of the employee's work."

What are the duties tests for exempt employees?

Meeting the salary number gets an employee to the starting line. The duties tests decide the rest, and they look at what the person does, not what you call them. Each test starts with the same idea: the employee's primary duty has to be the exempt work. 29 CFR 541.700 defines primary duty as "the principal, main, major or most important duty that the employee performs."

The executive test

This is the one that applies to most supervisors. Under 29 CFR 541.100, an exempt executive must meet all four of these:

1. Be paid on a salary basis of at least the required level.
2. Have a primary duty of managing the enterprise or a customarily recognized department or subdivision of it.
3. Customarily and regularly direct the work of two or more other employees.
4. Have authority to hire or fire, or have suggestions on hiring, firing, advancement, or promotion "given particular weight."

The fourth element is the one that trips up small teams. A lead who tells the owner who is reliable is not the same as a lead whose recommendation on a hire is usually followed. If the owner makes every hiring and firing decision alone, the lead probably fails the test.

The administrative and professional tests

The administrative test, in 29 CFR 541.200, requires a primary duty of "office or non-manual work directly related to the management or general business operations" that includes the exercise of discretion and independent judgment on matters of significance. Think of an operations coordinator who sets vendor terms or an office manager who decides how the business runs. It does not fit a lead who follows a procedure someone else wrote.

The professional test, in 29 CFR 541.300, covers work requiring advanced knowledge or creative and artistic invention. Most shift-based operators will not use it for hourly-team supervisors.

The highly compensated employee test

At $107,432 or more in total annual compensation, an employee needs to pass only a short version of the duties test: customarily and regularly performing at least one exempt duty, and a primary duty that includes office or non-manual work. For a 20-person shop this is rarely the route. Few shift leads earn that much, and manual work does not qualify.

Can a shift lead who also works the floor be exempt?

Yes, and this is where operators most often assume the answer is no. 29 CFR 541.106 says concurrent exempt and nonexempt work "does not disqualify an employee from the executive exemption if the requirements of § 541.100 are otherwise met." It gives a retail example: an assistant manager can serve customers, cook food, stock shelves, and clean, and still be exempt if the primary duty is management.

The 50 percent rule of thumb is a guide, not a bright line. The regulation says employees who spend more than 50 percent of their time on exempt work "will generally satisfy the primary duty requirement," but also that "time alone, however, is not the sole test." An assistant manager can have management as the primary duty even while spending more than half the day running the register.

The same regulations draw the other edge. If the assistant manager is closely supervised and earns little more than the employees they oversee, the primary duty requirement generally is not met. And a working supervisor whose primary duty is production work does not become exempt just because they sometimes direct others.

The practical read for a manager: the more your lead's day is the same as everyone else's, the less the exemption is going to hold up, and the closer their pay is to the people they supervise, the weaker the case gets.

Which states set a higher salary threshold?

Several states set a salary floor above the federal $684. Where that happens, the higher number is the one to plan around, and some states also run a stricter duties test. The states below are the ones operators ask about most.

Colorado

Colorado's 2026 salary level for executive, administrative, and professional employees is $1,111.23 per week ($57,784 a year, rounded), effective February 1, 2026, according to the state's PAY CALC Order. The rule also requires the salary to be "sufficient for the minimum wage for all hours worked in a workweek." The highly compensated threshold is $130,014 a year on top of the weekly salary test.

Colorado's duties test is also tighter for executives. The state's COMPS Order requires supervising at least two full-time employees and spending a minimum of 50 percent of the workweek on supervision.

New York

New York sets two levels for executive and administrative employees as of January 1, 2026: $1,275.00 per week in New York City, Nassau, Suffolk, and Westchester, and $1,199.10 per week in the rest of the state, per the New York State Department of Labor. Multiplied across 52 weeks, those work out to $66,300 and $62,353.20 a year.

California

California ties the salary test to the minimum wage. Under the Industrial Welfare Commission's wage order for professional, technical, clerical, and similar occupations (8 CCR 11040), an exempt executive, administrative, or professional employee must earn "a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment." With the state minimum wage at $16.90 an hour in 2026, that works out to $1,352 per week, or $70,304 a year, for a 40-hour week.

California also defines "primarily" in the wage order as "more than one-half the employee's work time." That is a bright line where the federal rule is a guide. A California lead who spends 55 percent of the shift on the register does not meet the primary duty test, even if management is the most important thing they do. Other wage orders cover other industries, so check the one that applies to yours.

Washington

Washington sets the salary level as a multiple of the state minimum wage for a 40-hour week. Under WAC 296-128-545, the multiple for 2026 is 2.25 times, regardless of employer size. With the 2026 minimum wage at $17.13 an hour, that is $1,541.70 a week, or $80,168.40 a year, according to the Department of Labor and Industries. In 2027 the multiple is 2.25 times for employers with 50 or fewer Washington-based employees and 2.5 times for larger ones, and from 2028 it is 2.5 times for everyone. The dollar figure moves every January with the minimum wage, so check the department's figure for the new year before you set a salary.

What does a 52-hour week cost when the exemption fails?

Here is the case most operators are really asking about. Dana is a shift lead at a 20-person café. She was paid $18.75 an hour. The owner moves her to a salary of $750 a week, which is the same money for a 40-hour week, and calls her a manager. Most weeks she works 52 hours.

On salary alone, Dana passes the federal test: $750 is above $684. On duties, she does not. About 70 percent of her shift is the register and the espresso machine. She tells two part-timers what to do when it gets busy, but the owner writes the schedule and makes every hire. Her primary duty is not management, and her recommendations do not carry particular weight. She is not exempt.

Treating her $750 as pay for the first 40 hours, her regular rate is $750 divided by 40, or $18.75. The 12 hours over 40 are owed at time and a half, which is $28.125 an hour:

• 12 hours at $28.125 is $337.50 of unpaid overtime for the week.
• If that is every week of the year, the unpaid amount is $17,550.

That is the straightforward version. How a court calculates back pay for a misclassified employee can depend on what the employer and employee understood the salary to cover, and on state law, and some methods produce a smaller number. In the other direction, the FLSA lets an employee recover an equal amount again as liquidated damages, and claims can generally reach back two years, or three if the violation was willful. Treat the figure as a sense of scale, not a bill. Our overtime calculation guide walks through the standard method.

Now move Dana to Colorado with the same $750 salary. She fails before anyone looks at her duties. The state requires $1,111.23, so the salary is $361.23 a week short, and she is owed overtime regardless of what she does all day. In New York City the gap is $525 a week. The same offer that is legal on paper in one state is a misclassification in another.

And if Dana really did hire the part-timers, set their schedules, and spend most of her time running the café, then her work on the register would not disqualify her. In that case the exemption holds at 52 hours, and the owner owes nothing extra. The facts decide it, not the title or the paycheck.

What should you check before putting a shift lead on salary?

Run this checklist before you change anyone's pay, and keep a copy in the employee's file.

1. Look up the salary level in every state where the person works, and use the highest number that applies. Check the date on the source.
2. Describe the job in terms of what the person does each week, with a rough split of time between managing and doing the same work as the team.
3. Confirm who actually makes hiring and firing decisions, and whether this person's input is usually followed.
4. Confirm the person directs at least two other employees, and check your state's definition of that (Colorado requires full-time employees).
5. Look at the gap between their pay and the pay of the people they supervise. A thin gap is a warning sign.
6. Write a pay practice that never docks the salary for partial days or slow shifts.
7. Run the schedule math. If you plan to ask for regular 50-hour weeks, make sure the exemption would hold up if challenged, because the cost of being wrong rises with every hour you schedule.

If the answer to any of these is shaky, the safer move is to keep the person hourly and pay overtime when it comes up. An hourly lead who works 52 hours costs you the overtime premium. A misclassified lead can cost you the overtime premium for every week since the conversion, and the argument about it.

Overtime that happens by surprise is the real operational problem. A policy that defines who can approve extra hours helps, and our overtime policy guide has examples you can adapt. If you are weighing whether to require extra hours at all, see mandatory overtime.

How often do these thresholds change?

More often than operators expect. Colorado adopted its 2026 rules in December 2025 and has a further set of rules proposed for 2027. Washington's multiplier steps up each January through 2028. New York and California adjust with their minimum wages. The federal number has stayed put while the rest moved.

The simple habit is to re-check every state where you employ salaried staff each December, before the new year's schedule and pay changes go out. Keep a note of the date you checked, because an old threshold in an offer letter is how an exempt employee quietly becomes a non-exempt one.

This article is general information, not legal advice. Salary thresholds and duties tests change and vary by state, and the figures here come from the official pages linked above as of November 2026, so confirm the current rule with your state labor agency before you change anyone's pay.