Overtime and state rules · rules read October 11, 2026
Exempt vs nonexempt: the salary level and what it decides
A job title and a salary do not settle overtime on their own; a pay level and a duties test both have to be met.
Written by Radif Partners · How the hours are counted · Editorial policy
Hourly rate
$28.85
2,080 paid hours a year
| Federal method (÷ 2,087 hours) | $28.75 |
| Weekly | $1,153.85 |
| Biweekly (26 checks) | $2,307.69 |
| Semimonthly (24 checks) | $2,500.00 |
| Monthly | $5,000.00 |
| Weekly salary vs exempt level $684 | at or above |
Federal agencies divide annual basic pay by 2,087 hours (5 U.S.C. 5504(b)). Being paid a salary does not by itself make a job exempt from overtime. How this is calculated.
An employee is exempt from federal overtime only when two separate tests are met: the salary must reach a set level and the job duties must qualify. In 2026 the Department of Labor salary level for the executive, administrative and professional exemptions is $684 a week, which is $35,568 a year, and the total annual compensation level for highly compensated employees is $107,432. Anyone below those amounts is nonexempt and owed time and a half past 40 hours a week, even when paid a fixed salary. California sets a higher bar: an exempt employee must earn at least twice the state minimum wage for full-time work, which comes to $70,304 a year at $16.90 an hour, or about $1,352.00 a week. A salary of $60,000 clears the federal level by a wide margin yet fails the California one, so the same manager can be exempt in Texas and owed overtime in Los Angeles.
Does a salary reach the exempt level?
Weekly salary
$807.69
| Federal level $684/week | reached |
| California level $70,304/year | not reached |
The salary is one test; the job duties must also qualify.
Two tests, and the salary one is pure arithmetic
Exempt status is an exception to the overtime rule, and the first gate is money. The Department of Labor salary levels page sets $684 a week as the minimum for the executive, administrative and professional exemptions, the group payroll departments call EAP. Paid weekly, that is $684; biweekly, $1,368; across a year, $35,568. A salary under that figure ends the analysis: the position is nonexempt whatever its title, and every hour past 40 in the workweek earns time and a half under 29 U.S.C. 207.
The second gate is the work itself. Each of the three exemptions has its own description of the primary duties it covers, and those descriptions, not the job posting or the org chart, decide the outcome. This site does not try to grade duties; a worker who reaches the salary level and wonders about the rest should read the DOL material for the exemption that seems closest. What the numbers can do is rule positions out quickly, which is often where the money is.
| Level | Annual | Weekly | Hourly at full time |
|---|---|---|---|
| Federal EAP salary level | $35,568 | $684 | $17.10 |
| Federal highly compensated employee | $107,432 | $2,066.00 | $51.65 |
| California exempt minimum | $70,304 | $1,352.00 | $33.80 |
The hourly column is only a reference point: an exempt employee is not paid by the hour. It helps when comparing an offer. At $17.10 an hour for a 40-hour week, the federal floor sits only modestly above several state minimum wages, which is why so many salaried roles in retail and food service still qualify for overtime.
California's floor moves with the minimum wage
The California exemptions FAQ requires a salary of at least twice the state minimum wage for full-time employment. With the minimum at $16.90 from January 1, 2026 (DLSE), the computed level is $70,304 a year, $5,858.67 a month. A salaried shift supervisor in Sacramento on $60,000 clears the federal test by $24,432 yet falls $10,304 short of the state one. That supervisor is owed California overtime, which includes the daily rule after 8 hours explained on the California overtime page.
What nonexempt status means on a salaried paycheck
A nonexempt employee on a salary is common and perfectly legal; the overtime just has to be added. When the salary is meant to cover whatever hours the week brings, Fact Sheet #23 describes the method: divide the salary by the hours actually worked to find that week's regular rate, then pay half of it for each overtime hour, since the straight time is already inside the salary. A $650 salary over 46 hours gives a regular rate of $14.13 and $42.39 of overtime, for $692.39 that week. The rate falls as hours rise, which surprises people the first time they see it. The salaried overtime calculator runs this for any week, and the salary to hourly converter shows the straight hourly equivalent of an offer.
Reclassification works in both directions. A raise that lifts a salary above $684 a week can make a qualifying role exempt, and a pay cut below it reopens overtime from the first week it applies.