Plenty of Texas owners hand a trusted lead a salary and a title and consider the overtime question closed. Under the Fair Labor Standards Act, it is still wide open. A salaried employee skips overtime only when three federal tests all pass at once. Miss one and the salary still gets paid, plus time and a half for every hour past 40.
The three tests every exempt salaried employee must pass
| Test | What it asks | The federal line in 2026 |
|---|---|---|
| Salary level | Is the pay high enough? | At least $684 per week, or $35,568 a year |
| Salary basis | Is it a true salary? | A predetermined amount each pay period, not reduced because of the quality or quantity of the work |
| Duties | Is the job actually exempt work? | The primary duty fits an executive, administrative or professional role |
All three, every week. The paycheck covers the first two. The third is about what the person does all day, and the Department of Labor is blunt about the shortcut: "Job titles do not determine exempt status." Getting this sorted is the heart of worker classification.
Where overtime rules come from in Texas
For a Texas shop, overtime is a federal matter. The FLSA sets it at time and a half for hours over 40 in a seven day workweek, and the Texas Workforce Commission tells employers that, for all practical purposes, they can assume every employee is covered by the federal wage and hour laws. Everything below is federal law.
What happened to the higher salary threshold?
In 2024 the Department of Labor raised the salary line. On November 15, 2024, Judge Sean D. Jordan of the U.S. District Court for the Eastern District of Texas vacated that rule, and the thresholds went back to the 2019 levels: $684 a week for the standard exemptions and $107,432 a year for highly compensated employees. A search result quoting a bigger number is quoting a rule that no longer stands.
"...what matters is the functions or duties of the employee."
Judge Sean D. Jordan, U.S. District Court for the Eastern District of Texas, in State of Texas v. U.S. Department of Labor, as quoted by Bracewell LLP
The duties test, one role at a time
Duties are the one test a raise cannot buy. A shop lead who spends the day running a register or turning wrenches is doing the same work as the crew, whatever the business card says.
Exempt duties tests: executive, administrative and professional
| Exemption | Primary duty | Also required |
|---|---|---|
| Executive | Managing the enterprise or a recognized department or subdivision | Customarily and regularly directs the work of at least two full-time employees or the equivalent, and has authority to hire or fire, or recommendations on hiring, firing, advancement and promotion that carry particular weight |
| Administrative | Office or non-manual work directly related to management or general business operations | Exercises discretion and independent judgment on significant matters |
| Learned professional | Work requiring advanced knowledge that is predominantly intellectual | Knowledge in a field of science or learning, customarily acquired through prolonged specialized intellectual instruction |
Two exemptions with different math
An employee with total annual pay of $107,432 or more, including at least $684 a week on a salary basis, can be exempt as highly compensated if they customarily and regularly perform at least one exempt executive, administrative or professional duty. Certain computer employees can be exempt at an hourly rate of at least $27.63.
How a salary quietly loses its exemption
The salary basis test trips careful owners. Federal regulations say an exempt employee must receive the full salary for any week in which they perform any work, without regard to the number of days or hours worked. Docking a salaried lead for a slow Tuesday turns a salary back into an hourly wage with extra steps.
Salary deductions: what is allowed and what is not
| Situation | Deduct from an exempt salary? |
|---|---|
| Absent one or more full days for personal reasons, other than sickness or disability | Allowed, for the full days missed |
| Ready, willing and able to work, but there is no work that day | Not allowed |
| Output was slow or the work was sloppy | Not allowed: the salary cannot vary with the quality or quantity of the work |
| A full workweek with no work performed at all | No salary is owed for that week |
What a misclassification costs
When a salaried employee who fails a test was treated as exempt, federal law makes the employer liable for the unpaid overtime plus an equal amount in liquidated damages, along with the employee's reasonable attorney's fees. A claim can generally reach back two years, or three for a willful violation. That is a lot of Tuesdays.
Keep the paper trail
Federal rules require payroll records to be kept for at least three years. If a classification is ever questioned, those records are the first thing anyone asks for.
Fixing a classification you are unsure about
- List every salaried role and run it through all three tests, not just the paycheck.
- Compare the job description with what the person actually does most days.
- Check your deduction habits against the table above.
- Walk through the four question checkup or read more on how to stay legal.
This guide is general guidance, not legal advice. If you think you already owe someone back overtime, or an employee has raised it, talk to an employment lawyer before you change anything. For the roles that are simply unclear, ask Jennifer to walk them through the tests.
Frequently Asked Questions
Do salaried employees get overtime in Texas?
Some do. A salary alone does not remove overtime. Under federal law, a salaried employee is exempt only when their pay meets the salary level, is paid on a salary basis, and their primary duty passes an executive, administrative or professional duties test.
Can I make someone exempt by giving them a manager title?
No. The Department of Labor states that job titles do not determine exempt status. An executive exemption requires managing the business or a department, regularly directing at least two full-time employees or the equivalent, and real weight in hiring and firing decisions.
Is the exempt salary threshold still $684 a week?
Yes. After a federal court in the Eastern District of Texas vacated the 2024 rule on November 15, 2024, the threshold returned to $684 a week, or $35,568 a year, with $107,432 a year for highly compensated employees.
How far back can an employee claim unpaid overtime?
Generally two years under the FLSA, or three years if the violation was willful, and the employer can owe an equal amount again in liquidated damages.
About Overtime for Salaried Employees
- U.S. Department of Labor Fact Sheet 17A: the white collar exemptions and their salary and duties tests
- 29 CFR 541.602: the salary basis rule and permitted deductions
- Texas Workforce Commission: what the FLSA does and does not do for Texas employers
Sources: U.S. Department of Labor, Fact Sheet 17A, Sidley Austin LLP, U.S. District Court Vacates DOL Final Rule on FLSA Overtime Exemptions, Bracewell LLP, DOL Salary Rule Vacated by Texas Court, 29 CFR 541.602, 29 U.S.C. 216, 29 U.S.C. 255, 29 CFR 516.5, Texas Workforce Commission, FLSA: What It Does and Does Not Do