Exempt or Non-Exempt? How Employers Steal Overtime Through Misclassification

You work 50 or 60 hours a week. Your employer calls you "salaried" and "exempt." You never see a dime of overtime pay. And you assume that's just how it works.

It's not. Many so-called "exempt" employees are actually entitled to overtime—and their employers know it.

The Overtime Rule Most Employers Get Wrong

Under the Fair Labor Standards Act, non-exempt employees must receive overtime pay at 1.5 times their regular rate for all hours worked over 40 in a workweek. The only way an employer can avoid this requirement is if the employee qualifies for a specific exemption.

The most common exemptions are the so-called "white collar" exemptions:

• Executive
• Administrative
• Professional
• Computer professional
• Outside sales

To qualify for any of these exemptions, the employee must meet both a salary threshold and a duties test. Miss either one, and the employee is non-exempt—meaning they're owed overtime.

The Salary Threshold

As of the current federal rules, an employee must earn at least $684 per week ($35,568 annually) on a salary basis to potentially qualify for a white collar exemption. This threshold is a floor, not a guarantee.

Key point: The salary threshold is just step one. Paying someone $50,000 a year does not automatically make them exempt. They still must meet the duties test for a specific exemption.

Some states have higher salary thresholds. Oklahoma follows the federal standard, but this can change—and employers must stay current.

The Duties Tests: What Actually Makes You Exempt

Executive Exemption

To be exempt as an executive, the employee must:

• Have a primary duty of managing the enterprise or a recognized department
• Regularly direct the work of at least two full-time employees
• Have authority to hire and fire (or have significant influence over those decisions)

The classic example is a store manager who directs a team and makes staffing decisions. But many "assistant managers" or "shift supervisors" who spend most of their time doing the same work as hourly employees don't actually qualify.

Administrative Exemption

To be exempt as an administrative employee, the employee must:

• Have a primary duty of office or non-manual work related to management or business operations
• Exercise discretion and independent judgment on significant matters

This exemption trips up many employers. It's not enough to do important work—the employee must have genuine authority to make decisions that affect business operations, not just follow procedures or implement others' decisions.

Professional Exemption

The professional exemption has two varieties:

Learned Professional: Primary duty requires advanced knowledge in a field of science or learning, typically acquired through specialized education (doctors, lawyers, engineers, accountants, teachers).

Creative Professional: Primary duty requires invention, imagination, or talent in a recognized creative field (artists, writers, musicians, actors).

Computer Professional Exemption

For IT workers, the employee must:

• Be paid at least $684/week or $27.63/hour
• Have a primary duty involving systems analysis, programming, software engineering, or similar highly skilled computer work

Help desk technicians, network administrators focused on routine maintenance, and IT support staff often don't qualify—even though employers frequently classify them as exempt.

Outside Sales Exemption

To qualify:

• Primary duty must be making sales or obtaining contracts
• Must regularly work away from the employer's place of business

Inside sales representatives who work from an office or call center typically do not qualify, regardless of commission structure.

The "Primary Duty" Problem

The most common misclassification error involves the primary duty requirement. An employee's primary duty is "the main, major, or most important duty that the employee performs."

Here's where employers cheat: they give someone a "manager" title but have them spend 80% of their time doing the same work as hourly employees—stocking shelves, serving customers, running the cash register.

If the employee spends most of their time doing non-exempt work, they are likely non-exempt—regardless of title, regardless of salary.

Common Misclassification Scenarios

The "Assistant Manager" Problem

A fast food restaurant calls all shift leaders "assistant managers" and pays them a salary. But these employees spend most of their time cooking, cleaning, and serving customers. They don't supervise two full-time employees or have hiring/firing authority. They are likely non-exempt.

The "Office Manager" Who Does Everything

A small company titles someone "Office Manager" and pays them salary. But they spend their days answering phones, scheduling appointments, and filing documents. Without genuine discretionary authority over business operations, they're likely non-exempt.

The "Professional" Without Professional Duties

A company calls technical support staff "IT Professionals" and pays them salary. But their job is following scripts to troubleshoot common issues. Without high-level systems analysis or programming work, they're likely non-exempt.

The Salaried Laborer

A construction company pays foremen on salary and classifies them as exempt. But they spend most of their time working alongside the crew—not managing operations. Primary duty determines status, not the hours per week or pay structure.

Why Employers Misclassify

The financial incentive is enormous. If you work 50 hours a week at a $50,000 salary, proper overtime calculation would mean significant additional pay. By misclassifying you as exempt, the employer captures that overtime for free.

Some employers misclassify intentionally. Others genuinely misunderstand the rules. Either way, the result is the same: you work overtime, and you don't get paid for it.

What Misclassified Employees Can Recover

Under the FLSA, if you were improperly classified as exempt and denied overtime, you can recover:

• Unpaid overtime wages for all hours over 40 per week
• Liquidated damages equal to the unpaid overtime amount (effectively doubling your recovery)
• Attorney fees and costs

The statute of limitations is two years for standard violations, or three years if the violation was willful.

How to Evaluate Your Status

Ask yourself these questions:

1. Do I earn at least $684 per week (about $35,568/year)? If no, you're probably non-exempt regardless of duties.

2. What do I actually do most of the time? If you spend the majority of your time doing the same work as hourly employees, you may be non-exempt.

3. Do I genuinely supervise at least two full-time employees? For the executive exemption, this is required.

4. Do I have authority to hire, fire, or significantly impact those decisions? This is essential for the executive exemption.

5. Do I exercise real discretion on significant business matters? For the administrative exemption, following set procedures doesn't count.

6. Does my job require advanced professional education or genuine creative work? These are specific exemption categories.

Frequently Asked Questions

I'm paid salary. Doesn't that mean I'm exempt?

No. Salary is only one requirement. You must also meet the duties test for a specific exemption. Many salaried employees are entitled to overtime.

My employer says my job title makes me exempt. Is that right?

No. Titles don't determine exemption status. The actual duties you perform—how you spend your work time—control whether you're exempt.

Can my employer dock my pay if I miss a few hours?

If you're truly exempt (salary basis), your pay generally cannot be docked for partial-day absences. Docking exempt employees improperly can actually destroy the exemption and make them eligible for overtime.

What if I signed an agreement saying I'm exempt?

Agreements cannot override the FLSA. If you don't actually meet exemption requirements, you're entitled to overtime regardless of what you signed.

How do I calculate unpaid overtime if I was misclassified?

This requires determining your regular rate of pay and applying the 1.5x multiplier to hours over 40. For salaried employees, this calculation has specific rules. An attorney can help determine the correct amount.

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Employers who misclassify workers to avoid overtime are counting on you not knowing the law—or not thinking the fight is worth it. They're wrong on both counts.

At Addison Law, we represent Oklahoma workers in overtime and wage claims. Our attorneys know how to evaluate exemption status, calculate back wages, and pursue full recovery including liquidated damages. If you've been denied overtime, we want to hear from you.

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This article is for general information only and is not legal advice.