Does putting an employee on salary mean no overtime?

No. A salary is a way of paying someone. It does not decide whether you owe them overtime.

This is one of the most common mistakes I see, and owners make it with good intentions. Salary feels like a favor to both sides. The employee gets a steady paycheck and some freedom in their schedule. You get simpler payroll and no time clock.

Then that employee works 50 hours a week for two years, leaves unhappy, and files a wage claim. Now you may owe back overtime for all of it.

This is not rare. In fiscal year 2025 the U.S. Department of Labor recovered more than $259 million in back wages for nearly 177,000 employees, its highest total since 2019 (DOL news release, January 2026). That figure covers all wage violations, and unpaid overtime is one of them.

The Department of Labor is plain about the title question: "Job titles do not determine exempt status" (DOL Fact Sheet #17A).

Three things decide whether someone is exempt from overtime

1. How they are paid. They must be paid a true salary that does not drop when they work fewer hours.
2. How much they are paid. The federal minimum is $684 a week, about $35,568 a year, and some states set a higher one. Below it, they get overtime no matter what their title is.
3. What they actually do. Their real daily work has to fit one of the exempt categories, such as managing people or running a part of the business with real decision-making authority. The job title does not matter. An "office manager" who mostly answers phones and enters invoices is usually not exempt.

All three have to be true. Two out of three means you owe overtime.

What to do this week: list everyone you pay a salary. Next to each name, write what they spend most of their day doing. If the answer is the same work your hourly people do, that is the one to look at first.

Fixing it going forward is simple, and it costs far less than a claim.

This is general guidance from an HR consultant, not legal advice. Rules vary by state. If you are not sure about someone on your list, call or text me.

Sources

• U.S. Department of Labor, Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees
• U.S. Department of Labor, Wage and Hour Division news release on fiscal year 2025 back wages
• Phillips Lytle LLP, Overtime Exemptions Under the Fair Labor Standards Act Rolled Back to 2019 Standards (May 2026)

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