FLSA classification distinguishing employees entitled to overtime (non-exempt) from those who are not (exempt) based on duties and salary tests.
Under the FLSA, employees are classified as either exempt or non-exempt from overtime and minimum-wage requirements. Non-exempt employees are entitled to overtime pay at 1.5x the regular rate for hours worked over 40 in a workweek (and daily overtime in CA, AK, NV, and a few others). Exempt employees are not — but to qualify for an exemption, the employee must meet both a salary basis test and a duties test.
For 2026, the standard salary threshold is $1,128/week ($58,656/year). The most common white-collar exemptions are: Executive (manages a department or subdivision, supervises 2+ FTEs, has hiring/firing authority), Administrative (office or non-manual work directly related to management or business operations, with discretion and independent judgment), Professional (advanced knowledge requiring prolonged specialized study, e.g., doctors, lawyers, engineers, teachers), Computer Employee (systems analysts, programmers, software engineers earning above $684/week or $27.63/hour), and Outside Sales.
Misclassification is one of the most expensive payroll mistakes US employers make. Common errors include classifying inside sales as outside sales, classifying low-level supervisors as executive, or assuming a job title is enough (it's not — the actual duties matter). Audit classifications annually and after job-description changes. Class-action wage-and-hour lawsuits over misclassification routinely settle in the millions.
We reclassified our junior team leads from exempt to non-exempt after a duties audit confirmed they spent most of their time on individual-contributor work.
Peoplifi unifies HR, payroll, time tracking, and performance into one modern platform — so concepts like Exempt vs Non-Exempt stay handled, not stuck in spreadsheets.
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