How Employers Accidentally Turn Exempt Employees Into Non-Exempt Employees

The Fair Labor Standards Act (“FLSA”) guarantees that most employees in the United States are entitled to minimum wage as well as overtime pay when they work more than 40 hours per week. Under the law, non-exempt employees must be paid at least time and a half for every hour worked over 40 in each workweek. However, some employees are classified as “exempt” from these overtime protections, meaning their employer is not required to pay them overtime regardless of how many hours they work.

To be considered exempt, an employee must meet specific FLSA exemption tests, which typically include:

1. Salary Basis Test – The employee must be paid a guaranteed salary, not hourly wages.
2. Salary Level Test – The employee must earn at least a minimum amount set by the Department of Labor. The current salary threshold for the FLSA exemptions remains at $684 per week, equating to $35,568 annually.
3. Duties Test – The employee is not exempt just because they have a job title like “manager” or “supervisor.” Instead, they must meet the duties test, which focuses on what they actually do in their role—not just what their employer calls them. The duties test focuses on a list of particular jobs identified as exempt under the FLSA.

Common examples of exempt employees identified under the FLSA include:

• Executives and Managers – Employees who supervise two or more workers and have authority over hiring, firing, or workplace decisions.
• Administrative Employees – Employees performing office work related to business operations, such as HR managers or financial analysts, who use independent judgment in their roles.
• Professionals – Employees in jobs requiring advanced education (e.g., lawyers, doctors, engineers, teachers).
• Outside Salespeople – Employees who regularly work away from their employer’s place of business making sales.
• Certain IT and Computer Employees – Some computer programmers, systems analysts, and software engineers may qualify as exempt under specific rules.

The exemption standards under the FLSA are highly technical and far more complex than most employees realize. Simply having a job title like “manager” or receiving a salary does not automatically make someone exempt from overtime pay. The law requires employers to meet strict criteria related to job duties, salary structure, and decision-making authority—standards that even some employers misunderstand or intentionally misapply. Many employees wrongly assume they are not entitled to overtime because their employer told them so, when in reality, they may have been misclassified and owed significant back pay. Because these rules involve detailed legal analysis and vary by industry and state law, it is nearly impossible for lay employees to determine on their own whether they are being properly classified. That is why consulting an experienced wage and hour attorney is critical. A lawyer can review your job responsibilities, pay structure, and employer practices to determine if you are being unfairly denied overtime pay—and, if so, fight to recover the wages you have rightfully earned.

Best Wage and Hour Attorney Blogs on Point:

• Is All Work Performed On A Farm Exempt From Overtime?
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• Are Nannies, Butlers & Maids Entitled To Overtime Pay?

How Do Employers Accidentally Convert Exempt Employees From Exempt To Non-Exempt?

While exempt employees are not entitled to overtime, employers must be careful not to violate the FLSA’s strict exemption rules. If an employer makes mistakes, they can accidentally turn an exempt employee into a non-exempt worker, triggering overtime obligations.

Common employer mistakes that can lead to losing the exemption include:

• Docking pay for partial-day absences – If an exempt employee is paid based on hours worked rather than a set salary, they may be considered non-exempt.
• Failing to pay a guaranteed salary – If an employer reduces an exempt employee’s salary based on performance or work quantity, they can destroy the exemption.
• Requiring time tracking like a non-exempt worker – If an employer closely tracks hours, requires employees to clock in and out, or pays based on time worked, they may be treating an exempt worker like a non-exempt one.
• Altering job duties to remove exempt responsibilities – If an exempt employee’s duties shift toward routine, non-exempt tasks, they may no longer meet the duties test for exemption.
• Inconsistently applying exemptions – If an employer selectively pays overtime to some exempt employees but not others, it can weaken their claim that those employees are truly exempt.

Many companies make critical errors that unintentionally strip employees of their exempt classification. Again, because FLSA exemptions depend on specific legal tests, it can be difficult for employees to recognize when their employer has improperly classified them. Consulting a overtime attorney is the best way to determine whether you are being denied the overtime pay you deserve.

Best Wage Theft Attorney Blogs on Point:

• Can Hourly Employees Be Exempt From Overtime?
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Does Voluntarily Paying Overtime Waive An Employees Exempt Status?

No. A recent Fifth Circuit Court of Appeals was confronted with the employee’s argument that when her employer voluntarily paid her overtime at time and half, she became an non-exempt employee. Specifically, in Rodriguez v. City of Corpus Christi, 2025 WL 670453 (5th Cir. Mar. 3, 2025), the City of Corpus Christi temporarily paid overtime to an exempt employee, Annette Rodriguez, during the COVID-19 pandemic. The Fifth Circuit rejected Rodriguez’s argument and cited to 29 C.F.R. § 541.604(a), which provides: “An employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis.”  Applying § 541.604(a), the Fifth Circuit Court of Appeals pointed to the fact that Rodriguez:

1. Continued to receive a guaranteed salary every pay period, regardless of how many hours she worked.
2. Was paid additional overtime as an extra benefit, but this did not replace or alter her salary structure.
3. Did not have her salary deducted based on the quality or quantity of her work, meaning the employer maintained her exempt classification.

This case provides an important lesson: Paying overtime to an exempt employee does not automatically convert them into a non-exempt worker unless the employer fundamentally alters their pay structure or violates other exemption rules.

Best Overtime Pay Law Firm Blogs on Point:

• Is Overtime Only For Low And Middle Income Employees?
• There’s $4 Billion In Overtime Wage Theft Every Year – How Much Of That Is Yours
• Is It Illegal For My Job Not To Pay Me Overtime?

What Should I Do If My Employer Has Violated The FLSA By Not Paying Me Overtime?

If your employer has improperly classified you as exempt—or has made mistakes that converted your status to non-exempt without properly paying you overtime—you may be entitled to back pay, penalties, and damages. The Fair Labor Standards Act (FLSA) protects employees from wage violations, and you have the right to seek compensation for unpaid overtime and lost wages.

At Spitz, The Employee’s Law Firm, we have the experience and resources to hold employers accountable for wage and hour violations. If you suspect that your employer has improperly classified you, contact us today for a free consultation. We work on a contingency basis, which means you don’t pay unless we win your case.

Call us now and let us fight for your wage and hour rights.

Employment Lawyer Disclaimer

This overtime blog is for general wage and hour purposes only and should not be taken as legal advice regarding your FLSA situation. Reading this wage theft blog does not create an attorney-client relationship. If you believe your employer has misclassified you or violated wage laws, consult a qualified employment lawyer immediately. Each overtime pay case is unique, and past results do not guarantee future outcomes. Strict statutes of limitations apply, so act quickly. This blog is an advertisement for wage and hour and other legal services provided by Spitz, The Employee’s Law Firm.