Could Your Salaried Employees Be Owed Overtime?
One of the most common wage and hour misconceptions sounds like this:
"They're salaried, so they don't qualify for overtime."
In reality, that's not how the Fair Labor Standards Act (FLSA) works.
While many exempt employees are paid on a salary basis, salary alone does not determine whether an employee is exempt from overtime pay. Employers must also consider the employee's actual job duties.
What makes an employee exempt?
For many of the most common exemptions under the FLSA, employees generally must satisfy two tests:
They must meet the applicable salary threshold.
They must perform duties that qualify under a specific exemption, such as executive, administrative, or professional.
Both requirements matter.
An employee can earn a salary and still be entitled to overtime if their day-to-day responsibilities do not meet the applicable duties test.
Where employers often run into trouble
Job titles can be misleading.
An employee may have the word "manager" in their title but spend most of their time performing the same tasks as the employees they supervise. Others may be paid a salary because it's easier administratively, even though their responsibilities don't support exempt status.
Common issues can arise when employees:
Primarily perform routine or production work.
Have limited authority to exercise independent judgment.
Do not regularly supervise two or more full-time employees, despite being classified as exempt.
As organizations grow and roles evolve, classifications that once made sense may no longer reflect the reality of the position.
Questions employers should ask
If your organization has salaried employees classified as exempt, consider the following:
When was the last time those classifications were reviewed?
Do employees' current responsibilities align with their exemption status?
Have roles expanded or shifted over time?
Are managers relying on job titles rather than actual job duties when making classification decisions?
Periodic reviews can help identify concerns before they become larger issues.
Why this matters for affiliate partners
Trusted advisors often work closely with business owners as teams expand and responsibilities change. What began as a small organization with a handful of employees may look very different a few years later.
As businesses grow, employment practices need to evolve with them. Encouraging clients to revisit classifications periodically can help them avoid unintended compliance risks while ensuring employees are paid appropriately.
What to consider
Most employers don't intentionally misclassify employees. In many cases, the classification decision was made years ago and simply never revisited as the business changed.
The challenge is that roles evolve, responsibilities shift, and assumptions can linger long after they should have been reviewed.
The HR MRI Assessment® helps employers identify critical, major, and administrative concerns that may otherwise go unnoticed, including areas where classification decisions deserve a closer look. Addressing these issues proactively can help protect both the business and the people who make it successful.